Auditors have raised questions about whether former President Donald Trump's publicly traded company can continue operating, according to a new regulatory filing.
Trump Media and Technology Group, which operates the Truth Social platform, reported a $58.2 million loss in 2023 while generating $4.1 million in total revenue, according to a Monday filing with the Securities and Exchange Commission. . Trump Media cited interest payments totaling more than $39 million as the biggest expense of the year.
The filing includes a memo from Colorado-based independent accounting firm BF Borgers CPA PC stating that Trump Media's “operating losses cast significant doubt on its ability to continue as a going concern.” “There is,” he warns. The company has been working with Trump Media since 2022.
The memo was dated March 25, the day before Trump's company began trading on the Nasdaq stock exchange under the symbol DJT, initially soaring and drawing comparisons to so-called meme stocks.
The company's stock price fell more than 21% on Monday to $48.66. Its market value reached more than $6.5 billion.
A Trump Media spokesperson referred a request for comment to a Monday news release that quoted Trump Media CEO and former U.S. Rep. Devin Nunes.
“Upon completion of our 2023 financial report related to the merger, Truth Social is now debt-free and with over $200 million in the bank, opening many possibilities to expand and strengthen our platform. ,” Nunes said in the release. These opportunities are designed to make Truth Social the quintessential free speech platform for Americans. ”
The company acknowledged in its filing that it expects to operate at a loss for the “foreseeable future” in order to grow Truth Social's user base and attract more advertisers. It said it was “premature” to predict when profitability and positive cash flow from operations would be achieved. The company said it would need bridge funding of $5 million to $60 million.
Trump Media had about $2.6 million in cash on hand and $70.1 million in total debt at the end of 2023, according to filings. The company received an infusion of about $300 million a week ago in its merger with shell company Digital World Acquisition Corp.
Trump Media went public last week, giving the former president a paper net worth of about $7 billion. However, Trump is prohibited from selling his shares in the company for six months. Even before the latest losses were revealed, analysts said the value of Trump's company would plummet if he sold his company's stock.
“If he goes first [with selling]”Based on option pricing, DJT could fall by at least 15% to 40%,” Ben Emmons, senior portfolio manager and head of fixed income at NewEdge Wealth, said in a research note.
Analysts also expect the stock to trade volatile as the former president seeks a new term in the White House and his legal and political fortunes change. John Rekenthaler, vice president of research at Morningstar Financial Services Group, likened the company's stock to a cryptocurrency.
“Like Bitcoin, people buy Trump Media not because of its future cash flow, but because 1) they expect the price to go up, and 2) they feel an affinity for the asset,” Laken said. Mr. Thaler wrote. “Bitcoin owners are members of a club. Likewise, investors in Trump Media are no different on an even larger level. For them, DJT stock is a currency in which they can express their beliefs and commitments.” It represents.”
