The first annual report from the parent company of Donald Trump’s Truth Social platform contained an inescapable truth.
Perhaps fittingly, a report released April 1 by Trump Media & Technology Group said that “if President Trump’s popularity declines, TMTG’s brand value could decline,” citing this as a “risk factor” for owning the company’s stock.
So here we are. Stocks have been hurtling into oblivion since July 21, when President Joe Biden wrapped up his reelection campaign and endorsed Kamala Harris to run against Trump.
If President Donald J. Trump continues to use Truth Social to a minimal degree, TMTG may not be able to provide meaningful solutions.
Trump media and technology group acknowledges limits to Donald Trump’s obligations to use his social media platforms.
Since then, through Tuesday, shares of companies using Trump’s initials (DJT) as their ticker symbol have lost about 39% of their value. (The broader stock market, as measured by the Standard & Poor’s 500 index, has gained about 2% over the same period.)
During that period, the stock rose only five times on a daily basis and fell 17 times. Shares closed Tuesday at $21.42, down 82 cents, or 3.71%, after falling 3.56% the previous day.
In the context of DJT’s long history as a public company, this isn’t all that surprising. From its IPO closing price of $57.99 on March 26, the stock is down about 63%. From its all-time high of $79.38 before the drop that day, the loss is 73%. Choose which calculation you prefer. Both meet the dictionary definition of “ugly.”
There is certainly a chance that DJT will recover some or all of its daily losses by the end of trading Tuesday, and possibly break out of the long-term shneid it currently appears to be stuck in. The volatility of the stock has made GameStop look like a cool, stable financial asset.
But there is still a backlash. It wasn’t really a secret.
Of course, the biggest blowback is Trump himself, as revealed in the annual report. With Biden’s resignation upending the race and Kamala Harris stepping into the forefront, Trump’s chances of winning in November have clearly diminished.
At the same time, Trump’s rhetoric and actions on the campaign trail have become more exciting and stimulating. His standing among MAGA believers may have remained solid, but his appeal to independent voters seems to have diminished. Certainly not strengthened. Given that DJT is seen as a proxy for his campaign, the decline in DJT’s value is not surprising.
But other counterweights have become more important. One is the question of what Trump will do with his shares in the company, which, according to the company’s financial disclosures, amounted to 59.9% of the total as of mid-July. Trump has the right to sell some or all of those shares starting in mid-September, when a six-month lock-up period expires.
If there are signs that Trump is trying to stop investing in DJT, the stock price is very likely to plunge. The weakness could be partly due to speculation that he is plotting to embarrass outside investors, as he has done to investors, partners, and customers in other businesses.
Trump owns so much of the company that he could potentially make more than $1 billion by selling shares before other shareholders have a chance to exit without a loss.
Trump has already shown that he does not take his responsibility to support Truth Social seriously. He built the platform as a branded alternative to Twitter (now X) after being kicked out of Twitter following the January 6 riots. But there is no contractual requirement that Trump use Truth Social as his exclusive social media outlet.
One clause in the licensing agreement with DJT requires that you post your personal social media communications to Truth Social six hours before posting them on other platforms.
But his deal with the company allows him to post “politically relevant” messages on any platform he chooses, and he has sole authority to decide which posts fall into that category. The company says there is “no meaningful redress” if he disagrees with what it designates as “politically relevant.”
Elon Musk restored Trump’s X account in November. He had posted little until recently when it became more active. And Trump has posted a few tweets on the platform, most notably on August 12, when he and Musk engaged in a two-hour tirade. “Interview” full of glitches It’s about X, not Truth Social.
And then there’s the company’s status as a going concern. It issues all the disclosures required of a public company in the United States, but anyone reading it would be wise to open a window first.
Read more: Column: Trump’s Media Company Goes Public, Raising Billions. Who Will Invest?
Financially, it still has a market cap of $4 billion, but the company looks nothing like anything value investing pioneers might imagine. Benjamin Graham and David DoddIn its latest quarterly report, issued Aug. 12, the company reported a loss of $344 million on revenue of $1.4 million for the first half of the year.
Anyone who has been paying close attention to Trump’s career will not be shocked by these numbers. Nor will they be shocked by the fact that the stock has risen this high despite these numbers.
Truth Social was a joke from the beginning, a joke that still pokes fun at the many people who hang “Trump Won” flags in their front yards or wear red MAGA hats to mixed-gender gatherings. I wrote before the IPOIt went public via a special purpose acquisition company, or SPAC, a process often used to bypass government regulations for going public to investors. SPACs have fallen out of favor as many deals have failed. Truth Social was one of the most high-profile, but its fate may not be any different.
In its first annual report, released on April Fool’s Day, the company said it does not consider itself a real social media business at all. It said it has no plans to “collect, monitor, or report” on the traditional metrics used by other social media platforms: “average revenue per user, ad impressions and pricing, … monthly and daily active users.” In other words, all the metrics that tell social media companies who’s using it, who’s using it, and how much their engagement is worth in dollars and cents.
The report said obtaining such information would only be a “distraction” for company executives, but it was unclear how executives would strategize for the future, including where they are now and how many users they have.
I wrote that it was ready to be set when the SPAC deal to take Truth Social public was first announced in 2021. The pinnacle of investment planning And in April, a month after the IPO, Trump may be smiling all the way to the bank, but his investors Only tears remain.
We’re on our way to that glorious moment where we can say, “I told you so.” Or maybe we’ve already gotten there.
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This story was originally published on: The Los Angeles Times.
