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Monday, June 24, 2024

Trump Media Reports Modest Revenues Amid Significant Losses

Trump Media & Technology Group, the social media company founded by former President Donald J. Trump, announced it had generated $770,000 in advertising revenue in the first quarter of the year, primarily from its Truth Social platform. Despite this, the company continues to face substantial financial losses.

In March, Trump Media completed a highly anticipated merger with Digital World Acquisition Corporation, a special purpose acquisition company (SPAC) designed to take Trump Media public. Following the merger, Trump Media reported having approximately $274 million in cash and cash equivalents on its balance sheet, which the company believes will support its operations for the foreseeable future.

The merger has significantly benefited Mr. Trump, who holds nearly a 65 percent stake in the company, valued at about $6 billion. Trump Media also enjoys a high valuation, exceeding $7 billion based on the company’s share price.

According to a regulatory filing, Trump Media’s revenue for the first quarter was $770,000, a decline from the $1.1 million reported in the same period last year. The company attributed the revenue decrease to a change in its revenue-sharing arrangement with one of its advertising partners.

The first quarter of this year was dominated by expenses related to the merger, making it difficult to compare directly with the same period last year. Trump Media reported a net loss of $327.6 million in the first quarter, with $311 million of that stemming from “noncash expenses arising from the conversion of promissory notes.”

When the merger deal closed on March 25, about $40 million raised from investors was converted into shares of the newly public company under the terms of those promissory notes.

On an operating basis, Trump Media lost $12.1 million in the first quarter, compared to a $3.6 million loss in the same period in 2023. Approximately half of the operating loss this year included costs associated with the merger.

Last year, Trump Media reported a loss of $58 million, with about $4 million in revenue, nearly all of which came from advertising on Truth Social.

Many of Trump Media’s shares, including the roughly 115 million owned by Mr. Trump, are subject to a six-month lockup period, which expires in September. The majority of the shares currently traded are held by individual investors, many of whom are supporters of the former president.

In its earnings release, Trump Media noted that its shares are “held by over 621,000 shareholders, the vast majority of whom are retail investors.”

Trump Media released its earnings results after the stock market closed, with shares ending the day down 5 percent at $48.38.

The company’s journey has been marked by significant financial hurdles and ambitious plans. While the merger with Digital World Acquisition Corporation has provided a substantial cash infusion, Trump Media faces the ongoing challenge of turning its early-stage advertising efforts into sustainable revenue. The focus now will likely be on expanding its advertising base and reducing operational losses to improve its financial outlook.

As the company moves forward, it will be essential to monitor how it navigates these challenges and whether it can leverage its high-profile platform and substantial financial backing to achieve long-term success in the competitive social media landscape.

David Faber
David Faber
I am a Business Journalist of The National Era
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