Trump Media & Technology Group (DJT), the parent company of Donald Trump's social media platform Truth Social, fell more than 21% on Monday after last week's blockbuster debut.
The stock price drop comes on the heels of the latest regulatory filing early Monday showing the company is incurring huge losses and faces “greater risks” related to its former president's relationship with the platform. woke up.
Trump Media reported a net loss of nearly $60 million for the year ended Dec. 31 on revenue of just over $4 million, according to filings. The company warned that it expects losses to continue as profitability challenges grow.
“TMTG has historically had operating losses and negative cash flow from operating activities,” the filing states.
“TMTG expects to continue to incur operating losses and negative cash flow from operating activities for some time as we strive to expand our user base and attract more platform partners and advertisers.”
Truth Social has attracted approximately 9 million users since its launch. But its success relies heavily on former President Donald Trump's “reputation and popularity.”
Citing risks such as harassment of advertisers and criticism of Truth Social's moderation practices, the company said, “The focus of its offerings and President Trump's involvement make TMTG a popular social media platform. “They could be at greater risk.”
“If President Trump's popularity declines, TMTG's brand value may decline.”
Notably, Trump Media revealed that it relies heavily on advertising, with ad sales accounting for a “substantial portion of its revenue.”
“If Truth Social experiences a decline in user numbers or user engagement, such as as a result of losing prominent individuals and organizations that generate content, advertisers may find Truth Social less attractive for their marketing. “Their spending may decline and our spending may decline, which could adversely affect our business and results of operations,” the company warned.
The filing also revealed that shareholders are still subject to a six-month lock-up period before they can sell or transfer their shares.
Trump maintains about a 60% stake in Truth Social, which is now worth more than $3 billion at current trading levels.
Selling some of the company's stock to raise cash is a step for the former president, who faces a $454 million fraud penalty and faces a campaign cash crunch ahead of a rematch with Biden in the 2024 election. The opportunities you get can help.
The only exception to the lock-up period is if the company's board of directors resolves to implement special measures. While possible, experts told Yahoo Finance last week that the effort would likely result in multiple lawsuits on behalf of public shareholders.
Late last month, with shareholder approval, Trump Media merged with special purpose acquisition company Digital World Acquisition Corporation and listed on the Nasdaq.
The former president founded Truth Social after being banned from major social media apps such as Facebook and Twitter, the platform now known as X, following the January 6, 2021 Capitol riot. Trump has since returned to these platforms.
In its application, Truth Social calls for a “'home' for canceled content creators” and a space for “honest global conversations without fear of censorship or cancellation” based on political viewpoints. We maintained our goal of providing.
alexandra canal I'm a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, Email alexandra.canal@yahoofinance.com.
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