For devoted supporters of the MAGA movement, former President Donald Trump’s much-touted venture into the realm of social media with Truth Social appeared to be an assured triumph, especially within conservative circles. However, as reality sets in, it’s becoming increasingly apparent that the platform is not only failing to gain traction but is also on the brink of financial ruin.
Despite Trump Media & Technology Group (DJT) being valued at over $9 billion, largely due to Trump’s influence, Truth Social, its flagship product, is floundering. Recent data paints a grim picture of its performance, showing a steady decline in both user engagement and overall relevance.
Truth Social’s daily active user base in the US, a key metric for any social media platform, has plummeted by 19% year over year, dwindling to a mere 113,000 users on iOS and Android, according to Similarweb. Even with significant events like the Trump criminal trial and the looming presidential election dominating headlines, the platform has failed to capitalize on these opportunities to attract more users.
This downward spiral spells trouble not only for Truth Social but also for Trump himself, who not only holds a substantial stake in Trump Media but also serves as its chairman and most prominent user. The company’s own filings acknowledge the dire consequences of stagnant user growth, warning investors of the imminent threat to its business prospects.
Despite efforts to downplay these alarming trends, Truth Social’s spokesperson, Shannon Devine, insists on highlighting its supposed growth. However, the stark reality contradicts these claims, with Truth Social lagging far behind its competitors in terms of user engagement and overall market share.
Even in comparison to other struggling platforms, Truth Social’s decline stands out. While some competitors have managed to maintain or modestly grow their user base, Truth Social’s trajectory is distinctly downward. Its inability to attract and retain users, coupled with its diminishing web traffic, underscores the fundamental flaws in its business model.
The recent influx of shares to Trump as part of a bonus further complicates the situation, tying his fate even more closely to the floundering venture. With the market volatility surrounding Trump Media’s stock price, the future looks increasingly uncertain, with bankruptcy looming as a distinct possibility.
Trump recently received an additional 36 million shares of Trump Media as part of a bonus package known as earnout shares. With this addition, Trump’s ownership stake in Trump Media now stands at 114.75 million shares, valued at $5.6 billion.
As per an agreement, the former president has pledged not to liquidate this stake for the next several months. However, forecasting the future worth of this holding post the expiration of the lockup period presents challenges due to the volatile trajectory of Trump Media’s stock price.
Following an initial surge to over $66 per share shortly after its public debut, Trump Media (DJT) witnessed a significant downturn, hitting a low of $22.84 on April 16.
Taking into account all outstanding warrants, Trump Media’s diluted market valuation stands at $9.4 billion, as assessed by Matthew Kennedy, a senior strategist specializing in initial public offerings at Renaissance Capital.
Kennedy acknowledges an opposing perspective suggesting that Trump Media diverges from the norms associated with social media stocks, often referred to as the “meme stock argument.” He underscores that while stocks may experience temporary detachment from their fundamentals, over time, valuation tends to reconcile with underlying performance metrics.
“This is the ‘meme stock argument,” Kennedy said. “Stocks can be become untethered to their fundamentals for a time, but in the long-run the valuation and the fundamentals tend to converge.”
The harsh reality is that Trump’s media company appears to be nothing more than a spectacular failure, doomed to obscurity and financial ruin.
