President-elect Donald Trump dismissed rumors on Friday, November 8, 2024, about his plans to sell his stake in Truth Social, his own social media platform. This denial led to a significant 15% increase in the company’s stock price within just one day. Speculations about the future of Truth Social were rampant due to the recent unpredictable behavior of its stock and Trump’s election win.
Trump took to his own platform, Truth Social, to address the rumors, stating, “There are fake, untrue, and probably illegal rumors and/or statements made by, perhaps, market manipulators or short sellers, that I am interested in selling shares of Truth. THOSE RUMORS OR STATEMENTS ARE FALSE. I HAVE NO INTENTION OF SELLING!”
Trump, the owner of 56.6% of Trump Media & Technology Group (TMTG), the parent company of Truth Social, called for an investigation into those spreading the sales rumors. His ownership, equivalent to 114.75 million shares, is currently estimated to be worth around $4.2 billion, thanks to the surge in stock price following his election. This makes it the most substantial part of his net worth.
The financial journey of Truth Social has been anything but smooth. The platform has grappled with problems related to user retention and revenue generation. In the first three-quarters of 2023, the platform raked in $3.4 million in revenue while reporting a total loss of $49 million.
In comparison, when Facebook, currently referred to as Meta, went public, it had generated $3.71 billion in revenue the previous year and was already turning a profit. However, Truth Social is much smaller, catering to a limited, niche user base that does not have the global reach of other publicly traded social media platforms.
Estimates from SimilarWeb show that as of February 2024, Truth Social garnered about five million monthly global website visits and had approximately one million monthly active app users in the United States.
In contrast to its larger competitors, Truth Social has not revealed its user engagement metrics, a move that is unusual for a company entering the public markets. For instance, at the time of their respective IPOs, Facebook boasted 845 million monthly active users (MAU) in 2012, and Twitter, now known as X, reported 215 million in 2013.
The most recent quarterly report revealed a revenue of just over $1 million and a net loss of $19.2 million, largely due to legal expenses exceeding $12 million. TMTG’s fluctuating stock price reflects market predictions on Trump’s political future, leading to its current market cap of approximately $10 billion. Nevertheless, analysts have pointed out that this valuation appears disconnected from the platform’s financial fundamentals, indicating the difficulty of maintaining its current value.
Truth Social maintains a modest user base of around two million active users, with about five million monthly global visits. User engagement has fallen over 39% compared to the previous year, underlining the struggle to compete with larger platforms. However, TMTG recently launched Truth+, a video streaming platform that executives believe could be a potential revenue source. CEO Devin Nunes is optimistic about Truth+, considering it as “a major driver of long-term earnings and shareholder value” while also discussing potential mergers with companies that could benefit from Truth Social’s technology.
Speculation about a potential merger with Elon Musk’s X has added to the speculation about the future of Truth Social. Although X boasts 611 million active monthly users compared to Truth Social’s two million, recent valuations show TMTG outperforming X Holdings, sparking discussions of potential collaboration. Neither company has confirmed any such plans, but the speculation has piqued interest in TMTG’s stock, which has been traded more like a “meme stock” than as a reflection of its fundamentals.
As Trump prepares to assume office again, ethical questions about his TMTG stockholding arise. Federal regulations might necessitate him to divest his shares to avoid any conflicts of interest. In his previous tenure as president, Trump had transferred business control to his sons, a move he might replicate. However, he could face increased federal scrutiny, which may exert new pressure to put TMTG assets in a blind trust, especially considering the impact of the stock on his financial status.