Donald Trump's net worth plunges $1bn after Truth Social's $58mn loss and stock debacle - Hindustan Times
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Donald Trump's net worth plunges $1bn after Truth Social's $58mn loss and stock debacle

Apr 02, 2024 10:01 AM IST

Former President Trump's holding in firm Truth Social plummeted after the company reported a loss and an auditor cast doubt on its future

After a blockbuster debut on Nasdaq Donald Trump’s Truth Social has failed to impress the stock markets. Shares in Trump Media & Technology Group, the parent company of Truth Social, have fallen by 21.5% as investors closely examined its business fundamentals.

Trump's Truth Social reported a loss of $58m, leading to further decline of his stocks(AP)
Trump's Truth Social reported a loss of $58m, leading to further decline of his stocks(AP)

Amidst the downturn Trump's stake in the entity also took a hit of more than $1 billion on Monday. This came after the social media company disclosed a loss of $58.2 million last year and its auditor, BF Borgers of Colorado, expressed "substantial doubt" about its ability to stay in business.

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Trump Media's tumultuous ride on Nasdaq

Last week, Trump’s considerable stake in the firm was valued at approximately $4.88 billion. However, following Monday's market decline, its value dropped to about $3.83 billion. On first day of trading the stock had jumped more than 30%, making Trump's shares worth more than $5.2 billion.

That early enthusiasm didn't last. The stock fell more than 6% last Thursday and another 21% on Monday, reducing the value of the former president's stake to $3.8 billion.

Despite an increase in sales to $4.13 million in 2023 from $1.47 million in 2022, the figures highlight the limited scale of Trump Media's operations and the extent of its losses.

BF Borgers of Colorado, in the company's filings on Monday, stated that the losses “raise substantial doubt about its ability to continue as a going concern”.

Also Read:After a High Truth Social plummets, expert warn of risks linked to Trump

Trump Media acknowledged that it might face “greater risks” compared to other social media platforms “due to the focus of our offerings and the involvement of President Trump”.

Devin Nunes, CEO of Trump Media, expressed enthusiasm about operating as a public company. He stated, “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.”

Both Trump Media and Digital World Acquisition, the shell company it merged with last week, have seen a surge in their share prices since the beginning of the year.

The company's valuation is now comparable to Reddit, a social network that recently went public. Reddit reported sales of $804 million in 2023, with losses of $90.8 million.

Trump Media's net losses amounted to $58.2 million in 2023. Excluding interest expenses on its debt, the company reported operating losses of $16 million, a slight improvement from $23.2 million in 2022.

Trump Media now a meme stock

Trump Media has become a so-called meme stock, influenced by internet memes posted on platforms like Truth Social, encouraging retail investors to buy into it. It joins a select group of stocks, most notably GameStop, that have shaken Wall Street with unexpected and volatile rallies in recent years. Sustaining momentum after the initial surge has often proven to be a challenge.

Trump's substantial stake in Trump Media has earned him a multibillion-dollar paper fortune. With the company's merger with Digital World last Monday, Bloomberg reported that the former president had entered the ranks of the world’s 500 wealthiest people for the first time.

However, Trump currently cannot sell his stake and will need the stock to maintain its recent high levels if he hopes to raise billions of dollars from a potential sale.

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  • ABOUT THE AUTHOR
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    Vertika Kanaujia is Editor Audience Growth at Hindustan Times and oversees the website’s coverage of business news, health, technology and internet culture. She is a Chevening Scholar and a Columbia Journalism University Fellow. Vertika has been a journalist for more than 18 years. After starting her career as a business journalist in TV she has worked with various leading news channels. You can email her at vertika.kanaujia@htdigital.in.

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