This photo shows an image of former President Donald Trump reflected on a phone screen displaying the Truth Social app, in Washington, DC on February 21, 2022.
Stephanie Reynolds | AFP | Getty Images
Its share price Trump media fell sharply on Monday morning after the social networking app company closely linked to former President Donald Trump reported a net loss $58.2 million with revenue of just $4.1 million in 2023.
Trump Media & Technology Group Shares were trading down more than 20% as of 12:30 p.m. ET.
Despite that plunge, the company’s market cap was still over $6.8 billion after its 8-K filing in Capital Market Commission revealed last year’s loss.
Much of the net loss appears to have come from $39.4 million in interest expense, according to the filing.
A company representative did not immediately respond to a request for comment on the new filing.
The filing shows that in 2022, Trump Media had net income of $50.5 million and total revenue of just $1.47 million.
The company closed 2023 with just $2.7 million in cash, the filing said.
Losses last year by Trump Media — the owner of the Truth Social app the former president commonly uses — could continue for some time, according to the company.
“TMTG expects to incur operating losses for the foreseeable future,” said the filing, which came a week after the company began trading under the ticker DJT on Nasdaq.
The filing also warns shareholders that Trump’s involvement in the company could put it at greater risk than other social media companies.
TMTG also disclosed to regulators that the company had identified “material weaknesses in its internal control over financial reporting” when it prepared a preliminary financial statement for the first three quarters of 2023.
As of Monday, Trump Media reported that these “identified material weaknesses continue to exist.”
Trump owns 57.3 percent of Trump Media, a stake worth more than $4 billion that Forbes last week said would represent well over half of his total net worth.
He is also expected to receive another 36 million shares of so-called “earnings” stock over the next three years, as long as Trump Media’s stock during that period hits a series of price benchmarks. Those targets are all well below the company’s share price early Monday.
Trump Media’s stock price soared when its stock began trading Tuesday, several days after the company merged with a special-purpose acquisition firm, Digital World Acquisition Corp., which traded under DWAC. The newly merged company now trades under Trump’s initials, DJT.
Analysts note that the company’s high valuation is due in part to stock purchases by Trump’s political supporters, who are excited about owning part of a company so closely associated with the presumptive Republican presidential nominee.
However, this excitement creates unique risks for the company. The new 8-K filing says Trump Media “may be subject to greater risks than typical social media platforms because of the focus of their offerings and the involvement of President Trump.”
“These risks include actively discouraging users, harassing advertisers or content providers, increased risk of hacking into TMTG’s platform, less need for Truth Social if First Amendment speech is not suppressed, criticism of Truth Social for its moderation practices, and increased shareholder lawsuits. .”