Trump Media Faces Challenges Amidst Declining Market Sentiment
Since its inception, Truth Social has attracted approximately 9 million users, but its success is heavily reliant on the reputation and popularity of former President Donald Trump.
According to Trump Media, the company faces greater risks than typical social media platforms due to its association with President Trump. Potential risks include advertiser harassment and criticism of moderation practices, which could lead to a diminished brand value if Trump’s popularity were to decline.
The company heavily relies on advertising, with ad sales contributing to a significant portion of its revenue. A decline in user numbers or engagement, especially from high-profile individuals and entities generating content on Truth Social, could deter advertisers, harming the company’s business and operating results.
Additionally, stakeholders are subject to a six-month lockup period before selling or transferring shares.
The recent slump in Trump Media’s shares, declining over 20% on Monday, reflects fading excitement since its public debut. The market value of Trump Media & Technology Group, trading as “DJT,” dropped by approximately $2 billion to around $6.5 billion, with Mr. Trump’s majority stake declining to about $3.7 billion from over $6 billion.
Despite this decline, Trump Media’s shares remain higher than before its merger with a public shell company, which pushed its market value to $10 billion at one point last week.
The company’s relatively small business size, highlighted by generating $750,000 in revenue in the fourth quarter of last year and recording a $58 million loss in 2023, raises concerns among investors.
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