Truth Social, the social media venture spearheaded by former President Donald Trump, has encountered a significant financial setback, as recent filings reveal. Launched in 2022 as Trump's preferred communication platform, the company has reported a staggering $73 million loss against $3.7 million in net sales, casting doubts on its financial viability.
The media's scrutiny intensified after The Hollywood Reporter disclosed the first public glimpse into the financial workings of Trump Media & Technology Group (TMTG), which owns Truth Social. It was revealed by Digital World Acquisition Corp.
(DWAC), TMTG's partner in a Special Purpose Acquisition Company (SPAC) merger, that Truth Social's fiscal performance in 2022 concluded with $1.4 million in sales and a $50 million loss. The trend continued into the first half of the current year, with sales of $2.3 million being overshadowed by a $23 million loss.
TMTG's Uncertain Future
The severity of the situation was underscored by a caution from TMTG's accountants, suggesting "substantial doubt" about the company's ability to continue operating. The merger with DWAC is pivotal for TMTG, with failure potentially resulting in the company's dissolution.
An amended S-4 filing highlighted several risk factors for TMTG, including layoffs that predominantly affected the streaming video on demand (SVOD) and infrastructure divisions. These layoffs, executed on March 1, 2023, followed an extensive internal review.
Truth Social's Exclusivity Clause
Trump's commitment to Truth Social includes an exclusivity term that mandates his social media posts debut on Truth Social and remain exclusive to the platform for a six-hour window before appearing elsewhere.
This agreement was spotlighted in Securities and Exchange Commission (SEC) filings. Yet, financial commitments pose another challenge; as reported by Fox Business, Truth Social had outstanding obligations exceeding $1 million to RightForge, the company hosting the platform online.
Additionally, a January report from Rolling Stone indicated Trump's reluctance to uphold his exclusivity term with Truth Social, despite being its founder. The latest documentation confirms Trump's verbal commitment to adhere to the exclusivity clause until the merger's conclusion, a promise made on October 30.
This agreement is seen as crucial to sustaining the platform's presence in the competitive social media landscape. This financial tumult arrives as TMTG aspires to cement its standing in the digital space, contending with established giants and emerging platforms alike.
The company's future now hinges on strategic financial management and the successful navigation of its pending SPAC merger. With a high-profile leadership and a politically charged environment, the performance of Truth Social remains under a microscope, as stakeholders and observers alike gauge its prospects in the evolving market.