CNBC (“Trump Media stock closes 21% lower after company reports $58 million loss for 2023“):
The share price of Trump Media closed trading 21.47% lower on Monday, hours after the social media app company tied to former President Donald Trump reported a net loss of $58.2 million on revenue of just $4.1 million in 2023.
Trump Media & Technology Group shares plunged by more than 25% around 1:08 p.m. ET before recovering slightly later in the day.
Trump Media’s closing price was $48.66 per share, more than $30 lower than its high of $79.38 per share, which it hit last week on the heels of becoming publicly traded.
Despite Monday’s steep drop, the company’s market capitalization was still nearly $6.6 billion.
But as of Monday’s closing price, Trump’s shares in Trump Media were worth about $3.8 billion, or around $2.5 billion less than they were last week.
Earlier Monday, Trump Media in its 8-K filing with the Securities and Exchange Commission since it went public through a merger with a shell company, revealed the loss for last year.
Much of the net loss appears to come from $39.4 million in interest expense, according to the filing.
NYT (“Trump Media Shares Slump as Early Fervor Fades“) adds:
Still, shares of Trump Media were higher than they were immediately before the firm merged with a public shell company on Tuesday and began trading on the Nasdaq. Strong support for the merged company after it began trading pushed its market value as high as $10 billion at one point last week.
That raised eyebrows across Wall Street, given the relatively small size of Trump Media’s business. A filing on Monday showed that the company generated just $750,000 in revenue in the fourth quarter last year, bringing its full-year total to $4.1 million. Trump Media recorded a $58 million loss in 2023. It got more than $300 million in cash as part of its merger with the shell company.
All the company’s revenues come from advertising on Truth Social, the digital platform that has become Mr. Trump’s main outlet for reaching his supporters and blasting his critics, political opponents and other perceived enemies, including the prosecutors and judges involved in his criminal and civil cases.
[…]
Trump Media stands out on Wall Street as the market’s most “shorted” stock — shares that investors bet will fall. Derivatives linked to the stock, which allow investors to speculate on its future price, have also been popular, suggesting that traders are braced for more big price swings — both higher and lower — in the weeks to come.
It is not uncommon for so-called meme stocks, which are heavily influenced by momentum and the enthusiasm of masses of small shareholders, to be extremely volatile, prone to sudden and steep increases and declines.
NBC News (“Trump Media auditor warns that losses ‘raise substantial doubt’ about company’s ability to continue“):
An auditor has raised doubts about the ability of former President Donald Trump’s publicly traded company to stay in business, according to a new regulatory filing.
[..]
The filing includes a note from an independent accounting firm, Colorado-based BF Borgers CPA PC, warning that Trump Media’s “operating losses raise substantial doubt about its ability to continue as a going concern.” In a separate filing Monday, Trump Media cited the auditor’s analysis in describing the risks facing the business. Borgers has worked with Trump Media since 2022.
[…]
A spokesperson for Trump Media referred a request for comment to a Monday news release that quotes Trump Media CEO and former U.S. Rep. Devin Nunes.
“Closing out the 2023 financials related to the merger, Truth Social today has no debt and over $200 million in the bank, opening numerous possibilities for expanding and enhancing our platform,” Nunes said in the release. “We intend to take full advantage of these opportunities to make Truth Social the quintessential free-speech platform for the American people.”
In the filing, the company acknowledged that it expects to operate at a loss for the “foreseeable future” as it works to expand Truth Social’s user base and attract more advertisers. It said it would be “premature” to predict when it will attain profitability and positive cash flows from its operations.
Truly a shame.
