Trump Media & Technology Group lost more than $300 million during the first quarter and generated very little revenue, the owner of Truth Social announced in a press release Monday.
The results will raise additional questions about the multi-billion dollar valuation on the newly public company, which is majority owned by former President Donald Trump.
Trump Media (DJT) reported a loss of $327.6 million during the first three months of the year driven mostly by one-time losses linked to the deal that brought the company public earlier this year. The company lost $210,300 a year earlier.
The company blamed the losses on non-cash expenses from the conversion of promissory notes and the elimination of previous liabilities.
Trump Media reported an operating loss of $12.1 million, with a chunk of that being driven by one-time payments related to the closing of its merger with a blank-check company earlier this year.
The company generated just $770,500 of revenue, marking the second-straight quarter where its revenue totaled less than $1 million.
“I can’t emphasize enough how unusual it is for a company with this little revenue to have this high a valuation,” Matthew Kennedy, senior IPO market strategist at Renaissance Capital, told CNN in an email.
In the press release, Trump Media said that at this “early stage” in its development, the company “remains focused on long-term product development, rather than quarterly revenue.”
It acknowledged that its advertising business is just getting off the ground and expressed confidence that new products like streaming will boost its results in the future.
“But if they’re not focused on revenue, public investors have very little to go on. What metrics can we look at? How can investors determine if the company is on the right track?” Kennedy said. “The company does not provide user metrics (though we could look at app downloads or Trump’s followers). It requires a lot of trust, and for now, shareholders seem to be willing to extend an enormous amount of trust. That can quickly change, as we saw in early April.”
Trump Media said that it has “sufficient” cash to fund the business “for the foreseeable future.” The company listed a cash balance of $274 million as of the end of March — a sum boosted by its deal to go public.
“After an unprecedented, years-long process, we have consummated our merger and dispensed with the vast bulk of merger-related expenses, leaving the Company well-capitalized and supported by a legion of retail shareholders who believe in our mission to provide a free-speech beachhead against Big Tech censorship,” Trump Media CEO Devin Nunes said in a statement. `
Nunes even said Trump Media’s cash balance gives the company the opportunity to explore potential mergers and acquisitions.
Experts have said the price tag on Trump Media stock defies logic given the company’s financial results and small footprint in social media.
Jay Ritter, a finance professor at the University of Florida’s Warrington College of Business, said “revenue is still anemic” for Trump Media.
“Although the company is not burning through its ample cash reserves rapidly, it is not generating much revenue, suggesting that there is no reason to think that the company will turn the corner and become profitable in the foreseeable future,” Ritter said.
Despite all the fanfare for the public listing earlier this year, Truth Social remains a very tiny player in social media.
In April, the conservative-friendly social network experienced a 19% year-over-year drop in average daily active US users on iOS and Android to just 113,000, according to market research firm Similarweb. Rival X (formerly known as Twitter) had more than 34 million users on iOS and Android, while Instagram’s Threads had 3.5 million.
Trump Media said its financials were reviewed by Semple, Marchal & Cooper, its newly hired accounting firm. The company’s previous accounting firm was accused of “massive fraud” by federal regulators this month. (Regulators made no allegation of wrongdoing against Trump Media, which was not mentioned in the charges against the auditor.)
