When Truth Social launched in 2022, it was lauded as a conservative-friendly alternative to the Big Tech platforms, aiming to draw in advertisers seeking to reach Donald Trump’s millions of followers. However, a recent regulatory filing has disclosed that the owner of Truth Social, Trump Media & Technology Group, has only made $2.3 million in sales through June this year, but has incurred losses 10 times that amount.
Furthermore, the filing included a sobering warning from Trump Media & Technology Group’s accountants, who expressed “substantial doubt about the company’s ability to continue as a going concern.”
Details about Trump Media & Technology Group’s financial situation were publicly revealed in a Monday filing from Digital World Acquisition Corp. (DWAC), a special-purpose acquisition company (SPAC) formed to merge with Trump’s business. This filing is considered “a crucial milestone in our journey towards the potential merger with TMTG,” shared DWAC CEO Eric Swider in a statement on Monday.
The caution by Trump Media’s accountants, also known as a “going concern” warning, suggests that the accounting firm doubts the company’s ability to handle its debts and could potentially default within the next year, according to S&P Global.
Nonetheless, it’s important to remember that the warning reflects only a moment in time, and that Trump Media’s impending deal with DWAC could potentially provide the necessary funding for the merged company to fulfill its obligations and drive growth.
In addition, the filing noted that Trump, who chairs Trump Media and has an ownership stake, has agreed to post on Truth Social before any other competing social media service.
When it comes to Trump Media’s financial status, the filing paints a picture of a company contending with mounting losses despite modest sales growth. Specifically, Trump Media reported revenue of $2.3 million for the first six months of 2023, compared to no revenue in the same period the year before. At the same time, its losses are increasing while cash is dwindling, with only $2.4 million in cash on hand as of June, down from $19 million the previous year. Despite recording a net profit of $50.5 million due to a change in the value of its convertible notes, the company reported an operating loss of $23.3 million in 2022.
Negotiations are ongoing between Trump Media and its creditors, with the filing containing a cautionary note indicating management’s concerns about the company’s ability to meet its obligations and settle its debts within the next 12 months.
For further context, Trump Media did not respond to a request for comment.
