Trump's Truth Social's $4 Billion Loss in Just One Week

Financial Turmoil Grips Trump's Media Venture Amid Market Volatility.

by Nouman Rasool
Trump's Truth Social's $4 Billion Loss in Just One Week
© Jeff Swensen/Getty Images

The once-promising venture of former President Donald Trump, Trump Media & Technology Group, is witnessing a significant downturn. Within a week of its high-profile debut on the Nasdaq Composite Index, the company has seen a staggering $4 billion erasure from its market valuation, casting doubts on its future viability.

This downward trajectory followed the company's public disclosure of its financial struggles in a regulatory filing, including a caution from its accountant about ongoing losses potentially jeopardizing the firm's operational continuity.

Trump Media & Technology Group, the umbrella company for Truth Social, saw its shares plummet by 21% to $48.66, a stark contrast to its initial public offering price and a 39% drop from its peak. Despite this, the stock is still up by 178% for the year, a testament to the speculative frenzy that initially buoyed its valuation.

Trump's Wealth Takes Hit

The impact on Trump's personal wealth has been considerable. The former president, who holds a 57% stake in the company, has witnessed a paper loss of $2.5 billion, reducing the value of his investment significantly.

However, the company's market capitalization remains remarkably high at $6.7 billion, surpassing well-established entities with substantial revenues, underscoring the speculative nature of its stock performance. The comparison of Trump Media to "meme stocks" like GameStop, which thrive on social media hype rather than solid financial fundamentals, is becoming increasingly apt.

Nevertheless, Truth Social aims to challenge tech giants, drawing parallels with early losses faced by companies like Facebook before achieving profitability. The financial disclosures reveal a company struggling to turn a profit, with a substantial loss in the last year despite a slight increase in revenue.

Yet, the possibility of future growth and stability remains, contingent on expanding its user base and reversing current losses. Trump's current inability to liquidate his holdings due to a standard "lock-up" agreement further complicates his financial situation, especially given his other financial pressures.

This restriction, however, could change, potentially allowing Trump to leverage his stake for financial gain in the near future.