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    • Truth Social investors hoped to become “very rich” after Trump’s victory. Not quite
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    Truth Social investors hoped to become “very rich” after Trump’s victory. Not quite

    Umito Posted on

    Drew Harwell
    | Washington Post

    South Carolina retiree John Viaud knew he was taking a big risk when he invested his retirement money in shares of his political icon’s social media company, Trump Media & Technology Group. Donald Trump.

    As his stock price fell in the months leading up to the election, he wrote on the company’s Truth Social platform: “This is getting depressing! I lost $600,000. …Go Trump!

    But Viaud hoped a Trump election victory would propel the stock into the stratosphere, posting: “In November we will all be very rich!!! »

    However, in the days following the election, the stock fell, losing nearly half its value since last month’s peak. And on a Truth Social investor forum, users who predicted a post-vote surge began expressing agitation. “The fact is we are in trouble,” one wrote.

    As its largest shareholder prepares to enter the White House, Trump Media faces what some financial experts call an identity crisis that has undermined its value.

    Launched after Trump’s Twitter account was suspended following the U.S. Capitol riot on January 6, 2021, Truth Social presented itself as a public square where Trump and others could speak freely without fear of censorship. With Trump banned from platforms like Twitter and Facebook, it was one of the few places fans of the former president could read his public statements.

    But as president, Trump will likely be one of the most uncensored men on the planet, followed almost everywhere by cameras, microphones and crowds. Social media companies that once banned him have also lifted restrictions on his accounts, giving him direct access to the world’s attention.

    Trump’s base of 8 million followers on Truth Social is dwarfed by his 14 million on TikTok, 35 million on Facebook and nearly 95 million on Twitter, now called X – the latter owned by Elon Musk, one of his supporters the most invested. , who regularly reinforces pro-Trump messages on his account of 200 million followers.

    “Trump Media’s whole argument was: We’re going to allow free speech in a way that hasn’t existed in years,” said Mike Stegemoller, a finance professor at Baylor University who studied the business. But Trump’s newfound power in the real world and online has “removed that competitive advantage…and that doesn’t bode well for a company that already makes very little revenue.”

    The Washington Post shared with Trump Media the information it intended to highlight in this report. Company spokeswoman Shannon Devine responded in a statement that the story was “ridiculously biased.”

    Trump Media sued the Post for defamation last year, claiming the news organization incorrectly reported allegations about its initial funding. The case is ongoing.

    Before the election, as Trump Media’s stock price went through a roller coaster of months, many Truth Social supporters said they hoped the election would resolve the volatility once and for all.

    Some suggested a victory would boost the stock, citing a research report from market data firm S3 Partners, which said Trump Media’s stock price “closely reflects Trump’s chances” in the markets online prediction, such as betting exchanges. The day after the election, some were heartened when the stock rose 30 percent.

    But the stock price then fell and has yet to recover. Its shares are now selling for around $29, down from last month’s high of $51 – and well below the $66 they were trading at when Trump Media first went public in March . (The stock opened down 9 percent Tuesday morning.)

    Trump Media said most of its roughly 650,000 shareholders were small investors, and some Trump supporters said they were betting on the company not only to make money but also to show their confidence in him .

    The president-elect is the company’s majority shareholder, with a stake of approximately 53 percent, currently worth more than $3 billion, more than the Forbes estimated value of all of his commercial real estate combined.

    Trump Media has struggled to create a profitable revenue stream, releasing a financial statement on Election Day showing it lost $363 million in the first nine months of the year and generated $2.6 million revenue over the same period, down 23 percent from last year. .

    Despite this, the company is valued by stock investors at nearly $7 billion, more than toy giant Mattel and Alaska Airlines, two companies that generate billions of dollars in revenue per year.

    Trump Media is “still looking for a viable business strategy,” said Jay Ritter, a finance professor at the University of Florida. Noting the huge disparity between its revenue and market value, he added: “The only thing the company has demonstrated it is good at is selling overvalued stocks.” »

    The Election Day report showed that Trump Media raised $339 million by selling more than 17 million shares that quarter, helping to increase the company’s cash reserves while diluting shareholder holdings. current. Trump Media said it was exploring “additional opportunities for growth.”

    Trump used Truth Social to announce his Cabinet appointments and said he had no plans to sell his stake in the company, saying, “I don’t need the money.” In a post-election post on Truth Social, he called for an investigation into possible “market manipulators” who had spread “false and likely illegal rumors” that he was interested in trading his stock.

    Other high-level company insiders, however, opted to cash out some of their shares after the election, according to securities filings. Trump Media Chief Financial Officer Phillip Juhan sold nearly 400,000 shares as part of a business plan adopted in August. The company’s director, Eric Swider, sold all of his 136,000 shares, although his consulting firm, Renatus, still holds a small stake. General counsel Scott Glabe sold 15,000 shares.

    Despite the intense focus on the campaign, Truth Social showed little growth in the weeks leading up to the election. Its website saw 10 million visits last month, a 20% drop from September, according to estimates from online analytics firm Similarweb. X had 4.6 billion.

    Trump Media, which has previously challenged Similarweb’s estimates, does not share the types of performance metrics commonly released by social media companies, such as the number of registrations or active users, saying such figures could distract from attention to its “long-term” objective. innovation.”

    Trump has made no announcement that he will leave the company when he takes control of the White House, and his continued involvement has raised concerns about conflicts of interest. But on Truth Social, some users spoke hopefully about the lifting effect Trump’s power could have on the stock.

    On days when the stock price fell, Viaud and other investors expressed suspicions that the company was being undermined by secret evildoers. A user who said he invested 98% of his retirement funds in Trump Media claimed without evidence that the stock price fell because of “deep state scammers” and “counterfeit stocks.”

    Viaud, the South Carolina retiree, frequently predicted on Truth Social that the stock would soar. “I think I can buy a cruise ship when this is all over,” he said in April.

    Volatility since the election has complicated his hopes for a quick turnaround. But some Truth Social users said they reaffirmed their confidence in the stock and urged themselves, as one poster wrote, to “involve all God-fearing patriots in acquiring some DJT stock.”

    Days after the election, as the stock price fell, Viaud reposted – or, in Truth Social terms, “ReTruthed” – a post from another member of the platform’s investor group.

    “This is the part of the story where the criminals panic, trying to scare you,” it reads. “This is the part of the story where you double down and buy even more DJT.”

    Umito
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