On Friday, November 8, 2024, President-elect Donald Trump forcefully denied rumors about selling his stake in Truth Social, his social media platform. This sparked a nearly 15% surge in the company’s stock price in a single day. Market speculation about Truth Social’s future was fueled by recent volatility in the stock and Trump’s recent election win.
“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,” Trump posted on Truth Social. “THOSE RUMORS OR STATEMENTS ARE FALSE. I HAVE NO INTENTION OF SELLING!”
Trump, who owns 56.6% of Trump Media & Technology Group (TMTG), the parent company of Truth Social, demanded an investigation into those spreading rumors about potential sales of his shares. His stake, consisting of 114.75 million shares, is currently valued at approximately $4.2 billion following his election-related stock surge, making it the largest component of his net worth.
Financial Challenges Despite Stock Gains
Truth Social’s financial trajectory has been turbulent. The platform has faced issues with user retention and revenue. In the first nine months of 2023, the platform earned $3.4 million in revenue and reported losses totaling $49 million.
In contrast, when Facebook, now Meta, went public, it generated $3.71 billion in revenue the prior year and was already profitable. Truth Social, however, remains much smaller, with a limited, niche user base that lacks the global reach of other publicly traded social media platforms.
Estimates from SimilarWeb suggest that as of February 2024, Truth Social received about five million monthly global website visits and had roughly one million monthly active app users in the United States.
Unlike its larger peers, Truth Social has not disclosed its user engagement metrics, an unusual move for a company entering public markets. By comparison, at the time of their IPOs, Facebook had 845 million monthly active users (MAU) in 2012, and Twitter, now known as X, had 215 million in 2013.
The latest quarterly report showed revenue of just over $1 million alongside a net loss of $19.2 million, much of which was attributed to legal expenses surpassing $12 million. TMTG’s volatile stock price has reflected market bets on Trump’s political fate, contributing to its current market cap of around $10 billion. However, analysts have noted that this valuation seems detached from the platform’s financial fundamentals, highlighting the challenge of sustaining its current value.
User Base and Platform Growth Initiatives
Truth Social holds a modest user base of approximately two million active users, with about five million monthly global visits. User engagement has declined over 39% compared to the previous year, underscoring the struggle to compete with larger platforms. Nevertheless, TMTG recently launched Truth+, a video streaming platform that executives see as a potential revenue stream. CEO Devin Nunes expressed optimism about Truth+, viewing it as “a major driver of long-term earnings and shareholder value” while mentioning the exploration of mergers with companies that could benefit from Truth Social’s technology.
Merger Speculation with Elon Musk’s X
Rumors of a possible merger with Elon Musk’s X have further fueled speculation about Truth Social’s future. Although X currently boasts 611 million active monthly users compared to Truth Social’s two million, recent valuations show TMTG outpacing X Holdings, igniting talks of potential collaboration. While neither company has confirmed any plans, the speculation has driven interest in TMTG’s stock, which has traded more as a “meme stock” than as a reflection of its fundamentals.
Potential Conflicts of Interest
As Trump prepares to re-enter office, ethical considerations about his TMTG stockholding loom. Federal rules may require him to divest his shares to prevent conflicts of interest. In his previous presidency, Trump sidestepped such conflicts by transferring business control to his sons, a move he may repeat. However, the federal scrutiny he faces could impose new pressure to place TMTG assets in a blind trust, especially given the stock’s influence on his financial standing.