Donald Trump, the President-elect, refuted rumors of selling his stake in his social media platform, Truth Social, on November 8, 2024. This vehement denial caused the company’s stock price to jump nearly 15% in just one day. Such speculation about the future of Truth Social was instigated by recent stock market fluctuations and Trump’s election victory.
On his own platform, Trump declared: “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, holding 56.6% of Trump Media & Technology Group (TMTG), Truth Social’s parent company, called for an investigation into the source of these rumors. His 114.75 million shares, now worth around $4.2 billion following the post-election surge, constitute the most significant part of his net worth.
The financial journey of Truth Social has been marked by turbulence, struggling with user retention and revenue generation. The platform garnered a revenue of $3.4 million but reported losses of $49 million in the first three quarters of 2023.
Unlike when Facebook, now Meta, debuted on the stock market with a revenue of $3.71 billion in the preceding year, Truth Social, a much smaller platform, has a niche user base and lacks the global presence of other publicly traded social media platforms.
According to SimilarWeb, by February 2024, Truth Social had about five million global website visits per month and around one million active app users monthly in the U.S.
Truth Social has kept its user engagement metrics under wraps, which is quite uncommon for a company entering the public markets. By comparison, Facebook had 845 million monthly active users (MAU) and Twitter, now known as X, had 215 million MAU during their initial public offerings in 2012 and 2013, respectively.
Truth Social’s recent quarterly report showed a revenue of just above $1 million along with a net loss of $19.2 million, with legal expenses accounting for over $12 million. The stock price of TMTG, reflecting market sentiment about Trump’s political future, has resulted in a current market cap of around $10 billion. Analysts, however, argue that this valuation seems disconnected from the platform’s financial fundamentals, pointing to the challenge of maintaining its current value.
Truth Social currently has approximately two million active users and receives about five million global visits per month. User engagement has dropped by 39% compared to the previous year, emphasizing the struggle to compete with larger platforms. Despite this, TMTG recently launched Truth+, a video streaming platform that executives see as a potential revenue source. CEO Devin Nunes sees Truth+ as “a major driver of long-term earnings and shareholder value” and is considering mergers with companies that could take advantage of Truth Social’s technology.
Rumors of a potential merger with Elon Musk’s X, boasting 611 million active monthly users compared to Truth Social’s two million, have further fueled speculation about Truth Social’s future. Recent valuations have shown TMTG outperforming X Holdings, leading to talks of potential collaboration. Neither company has yet confirmed any plans, but the speculation has increased interest in TMTG’s stock, which has traded more as a “meme stock” than as a reflection of its fundamentals.
As Trump gets ready to assume office again, ethical questions about his TMTG shareholding are surfacing. Federal regulations may necessitate him to divest his shares to avoid conflicts of interest. During his previous term, Trump circumvented such conflicts by transferring business operations to his sons. Yet, he may face increased federal scrutiny that could lead to placing TMTG assets in a blind trust, given the significant influence of the stock on his personal wealth.
