Trump Media’s stock drops more than 25% with the announcement of a $58 million financial loss for 2023.
Following the social media app company closely associated with former President Donald Trump’s announcement of a net loss of $58.2 million on revenue of just $4.1 million in 2023, the share price of Trump Media fell sharply on Monday. Around 1:08 p.m. ET, shares of Trump Media & Technology Group were down more than 25%.
Even after that decline, the company’s market value remained above $6.8 billion when the loss for the previous year was disclosed in its 8-K filing with the Securities and Exchange Commission. According to the statement, interest expense of $39.4 million appears to account for a large portion of the net loss. An inquiry regarding the latest filing was not immediately answered by a corporate representative.
According to the statement, Trump Media made a net profit of $50.5 million in 2022 despite only bringing in $1.47 million in total revenue. According to the report, the corporation has just $2.7 million in cash on hand at the end of 2023. The company, Trump Media, which owns the Truth Social app that the former president frequently uses, said that its losses from the previous year would linger for a while.
A week after the company started trading on the Nasdaq under the ticker DJT, the filing states that “TMTG expects to incur operating losses for the foreseeable future.” Additionally, the filing alerts investors to the possibility that Trump’s ownership of the business could make it more vulnerable than other social media platforms. Additionally, when TMTG issued a previous financial statement for the first three quarters of 2023, the business discovered “material weaknesses in its internal control over financial reporting,” which it disclosed to regulators.
As of Monday, these “identified material weaknesses continue to exist,” according to Trump Media. As Forbes reported last week, Trump’s ownership position in Trump Media, valued at almost $4 billion, accounts for 57.3% of his overall net worth. Additionally, if Trump Media’s stock meets a number of price benchmarks over the course of the next three years, he will receive an additional 36 million shares of what are known as earn-out shares. Each of these goals is set far below the opening stock price of the company on Monday.
A few days after Trump Media combined with Digital World Acquisition Corp., a special purpose acquisition company that had been listed under the ticker DWAC, the company’s stock price skyrocketed. The combined business is now traded under DJT, which are Trump’s initials. Analysts point out that a portion of the company’s high valuation can be attributed to political fans of Trump purchasing stock, as they are excited to hold a stake in a business that is so intimately linked to the presumed Republican presidential nominee.
But the corporation faces particular dangers because of that enthusiasm. Trump Media “may be subject to greater risks than typical social media platforms because of the focus of its offerings and the involvement of President Trump,” according to the most recent 8-K filing.
“These risks include active user disincentives, threats against content providers or advertisers, heightened vulnerability to TMTG platform hacking, reduced necessity for Truth Social in the event that First Amendment speech is not curtailed, disapproval of Truth Social’s moderation procedures, and an increase in shareholder litigation.”