The highly flamboyant stock market debut of Donald Trump’s social media venture, Trump Media & Technology Group, took a sharp turn as the company disclosed substantial losses in its latest financial filings.
Just days after its flashy entrance into the market, the company revealed a staggering loss of nearly $58.2 million for the fiscal year 2023, a stark contrast to the $50.5 million profit reported in the previous year, according to a company filing with securities regulators.
Investor confidence took a hit as Trump Media’s stock plummeted by over 21% on Monday, following the disclosure of its financial woes. The company’s revenue for 2023, while showing improvement at $4.1 million compared to $1.5 million in 2022, failed to offset the magnitude of its losses.
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Trump Media’s journey into the public market began with its merger with Digital World Acquisition Corp., a blank-check company, culminating in its listing on the Nasdaq stock market under the ticker symbol DJT on March 26. Initial trading saw a surge in stock prices, with shares soaring to over $79 at one point. However, the excitement quickly fizzled out, and the stock now hovers closer to its initial offering price of $49.95. Monday’s closing price of $48.66 served as a stark reminder of the volatility in the market.
Market analysts drew parallels between the fervor surrounding Trump Media and the meme stock craze of 2021, which saw shares of companies like GameStop and AMC Entertainment skyrocket to unprecedented heights. Interestingly, shares of these meme stocks also experienced declines on Monday, with GameStop and AMC down by more than 4% and 15%, respectively, at market close.
Trump’s foray into social media was viewed as a potential financial lifeline amidst his mounting legal and financial challenges. Apart from facing four criminal cases, Trump is grappling with a civil fraud penalty exceeding $454 million, following a ruling by a New York state judge. While an appeals court recently reduced the amount required to pause collection to $175 million, Trump faces a tight deadline to come up with the funds by Thursday.
Amidst the uncertainty surrounding Trump’s financial situation, attention has turned to his assets and liquidity. Trump’s recent financial statements indicate approximately $294 million in cash or cash equivalents as of June 30, 2021. Additionally, he gained around $186.8 million from selling assets such as the lease on his Washington hotel and the management rights to a New York City golf course.
While Trump Media’s public debut holds the potential to translate into billions on paper for the former president, there’s no immediate windfall. The company’s filing on Monday didn’t mention any alterations to the provision barring insiders like Trump from selling their shares for six months post-debut.
However, speculation abounds that the board might consider waiving this provision to enable Trump to liquidate shares to cover his mounting legal expenses.
