Former President Donald Trump’s Truth Social, touted as a major contender to big tech platforms, has faced financial setbacks since its launch, with the latest financial disclosure from Trump Media & Technology Group (TMTG) revealing a net loss of tens of millions of dollars.
According to Hollywood Reporter, Truth Social, and TMTG collectively reported $3.7 million in net sales, but the financial disclosure, derived from TMTG’s SPAC merger partner Digital World Acquisition Corp, suggests a concerning financial picture. When excluding the value of derivative liability, the company has experienced a loss of $60.5 million since its launch. However, including the value of the derivative liability, the loss stands at $31.5 million.
The financial situation has raised alarms, with TMTG’s independent registered public accounting firm expressing doubts about its ability to continue as a going concern.
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The filing states, “as of June 30, 2023, and December 31, 2022, management has substantial doubt that TMTG will have sufficient funds to meet its liabilities as they fall due, including liabilities related to promissory notes previously issued by TMTG,” and that “TMTG believes that it may be difficult to raise additional funds through traditional financing sources in the absence of material progress toward completing its merger with Digital World.”
As of June 30, 2023, and December 31, 2022, TMTG’s management expressed substantial doubt about having sufficient funds to meet liabilities, including those related to promissory notes. The filing indicates that raising additional funds through traditional financing sources may be difficult without material progress toward completing its merger with Digital World.
Originally valued at $875 million during the merger announcement, TMTG’s current valuation, as per Trump’s latest financial disclosure, places his controlling stake between $5-$25 million.
The filing also revealed changes in TMTG’s plans, notably the apparent shelving of its long-planned streaming video service. The company eliminated positions on March 1, 2023, significantly affecting TMTG’s streaming video on demand (SVOD) and infrastructure teams.
Trump announced the formation of TMTG in late 2021, positioning it as a competitor to major social media platforms. In May 2022, he agreed to make Truth Social his primary platform, adhering to a posting agreement. However, with the recent acquisition of Twitter by Elon Musk and Trump’s account reinstatement, the dynamics of the social media landscape have evolved.
The filing also outlines risks related to Trump’s ongoing legal challenges and business history, warning that there are no assurances that TMTG will avoid failure. Trump, as of October 30, has verbally affirmed his commitment to the agreement to make Truth Social his primary platform at least until the merger is complete.
Read also: Tech Issues, Legal Tussle And Financial Woes Putting The Future Of Trump’s Truth Social In Jeopardy
The uncertainty surrounding TMTG’s financial future remains contingent on the success of its merger and subsequent financial injections.