Trump Media and Technology Group (TMTG), the company affiliated with former U.S. President Donald Trump and operator of Truth Social, has disclosed its financial results for the first quarter of 2024. The company reported $770,500 in revenue alongside a staggering net loss of $327.6 million.
The financial announcement comes in the wake of TMTG’s recent debut on Nasdaq under the ticker symbol “DJT” on March 26, 2024, following its merger with Digital World Acquisition Corp. (DWAC). The Sarasota-based firm, which positions itself as a bastion for free expression in response to what it describes as “increasingly harsh censorship by Big Tech corporations,” has a market capitalization of approximately $6.6 billion at a closing price of $48.38 per share.
Trump holds about 64.9% of TMTG’s outstanding shares, making his stake worth approximately $5.5 billion. However, due to restrictions, he is barred from selling any TMTG shares for six months post-public trading initiation. His holdings include 114.75 million shares, encompassing 36 million in “earnout shares” according to the DWAC merger agreement finalized on April 26.
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In the first quarter, TMTG faced $311 million in non-cash expenses, primarily from converting promissory notes and eliminating previous liabilities right before the merger’s closure. On an adjusted EBITDA basis, the company reported an operating loss of $12.1 million, half of which, $6.3 million, consisted of one-time merger-related payments. Under generally accepted accounting principles (GAAP), TMTG’s operating loss was $98.35 million for the quarter.
The company’s substantial losses were addressed in its public statement which revealed: “At this early stage in the Company’s development, TMTG remains focused on long-term product development, rather than quarterly revenue.”
TMTG emphasized its commitment to enhancing Truth Social by introducing new features, launching a live TV streaming service, and expanding its ecosystem to eventually drive revenue and long-term value.
However, TMTG is not resting on its laurels. The company has announced plans to launch a live TV streaming platform within the Truth Social app for Android, iOS, and the web. Future phases will include stand-alone Truth Social OTT streaming apps for various devices, including home TV systems. This strategic expansion is part of TMTG’s broader vision to create a comprehensive media ecosystem.
In addition to its product development, TMTG’s “nascent advertising initiative” is expected to evolve, which could potentially become a significant revenue stream as the platform grows. As of March 31, TMTG reported cash and cash equivalents of $273.7 million, which the company claims is sufficient to fund its operations for the foreseeable future.
Auditor Changes and Shareholder Composition
TMTG appointed Semple, Marchal & Cooper as its independent registered public accounting firm effective May 4, 2024. This decision followed the SEC’s accusations against the previous auditor, BF Borgers, of engaging in “massive fraud” involving over 1,500 regulatory filings for public companies.
The group also revealed that its stock is held by over 621,000 shareholders as of April 29, 2024, with the vast majority being retail investors. This broad shareholder base indicates substantial interest and investment from the public in TMTG’s success and future prospects.
The Role of Donald Trump and Truth Social’s Growth
Since its launch in early 2022, Truth Social has not disclosed detailed user metrics. TMTG explained in its 10-Q filing that focusing on traditional KPIs like signups, ad impressions, and active user counts might detract from its strategic growth evaluation.
“At this juncture in its development, TMTG believes that adhering to traditional key performance indicators, such as signups, average revenue per user, ad impressions and pricing, or active user accounts including monthly and daily active users, could potentially divert its focus from strategic evaluation with respect to the progress and growth of its business,” the company said.
Truth Social was created after Trump was banned from major social media platforms due to allegations of inciting violence during the January 6, 2021, Capitol attack. Although Trump’s accounts have since been reinstated, he continues to prefer Truth Social for his communications.
TMTG acknowledged the importance of Trump’s influence in its filing saying: “TMTG’s success depends in part on the popularity of our brand and the reputation and popularity of President Donald J. Trump.” The company noted that any negative publicity or legal challenges involving Trump could adversely impact TMTG’s operations and growth potential.