Trump’s social network plummets on the stock market after million-dollar losses

Truth Social, a social network launched by former President of the United States, Donald Trump, is facing a serious financial crisis. Last year, the company behind the platform, Trump Media & Technology Group (TMTG), recorded an operating loss of US$58 million. This adverse result led to a drastic drop in the value of its shares, which plummeted by more than 23% in just one day.

TMTG, traded on the Nasdaq under the ticker symbol “DJT,” saw its shares plunge to $47.51, a blow to the company that, in its market debut on March 26, through a merger with Digital World Acquisition Corp. (DWAC), had its market value increased to around US$8 billion. The stock’s sharp drop reflects investors’ distrust in Truth Social’s financial viability and ability to grow sustainably in the competitive social media market.

Devin Nunes, CEO of TMTG and former congressman with an annual salary of $750,000, now faces the challenge of reversing this negative trend. Despite the platform’s stated goal of promoting free speech and offering an alternative to social media giants, financial difficulties and market backlash raise questions about Truth Social’s future.

Emergence and Initial Challenges

Truth Social, an alternative social media platform, was founded in October 2021 by Donald Trump. Created as a response to Trump’s ban from platforms like Twitter, Facebook and Instagram, Truth Social emerged with the promise of being a bastion of free speech, competing with other networks like Parler, Gab and Mastodon. However, since its launch in February 2022, it has faced several challenges, including significant financial and regulatory issues.

Despite initial expectations and substantial support, Truth Social had a difficult path. At its inception, the application was not available on Google Play due to violations of Google’s policies related to physical threats and incitement to violence. This situation was reversed in October 2022, when the platform adopted stricter content moderation policies. Still, the platform’s reception has been mixed, with Truth Social ranking well behind competitors in social media app rankings.

The difficulties were not limited to just the regulatory aspect and public acceptance. From a financial perspective, Truth Social has faced a challenging situation since its inception. In November 2023, it was revealed that the platform had accumulated a loss of at least US$31.5 million since its creation. In March 2024, Digital World Acquisition Corp (DWAC), a company created to finance TMTG and take it public, finalized its merger with TMTG. However, this was followed by a 14% drop in DWAC’s share price, highlighting the uncertainty surrounding the platform’s financial future.

Truth Social represents an ambitious attempt by Donald Trump to create an alternative to dominant social media platforms by promoting freedom of expression. However, the journey so far has been fraught with obstacles, from regulatory and technical issues to serious financial doubts. With the recent disclosure of a significant operating loss in 2023 and the resulting drop in share value, the future of the platform remains uncertain, with questions surrounding its long-term viability and ability to establish itself as a relevant force in the social media landscape.