Trump Media & Technology Group Faces Financial Challenges
When Truth Social launched in 2022, backers of the social network described it a conservative-friendly alternative to Big Tech platforms that would attract advertisers eager to court former President Donald's Trump's millions of followers. But a new regulatory filing reveals that Truth Social's owner, Trump Media & Technology Group, has booked only $2.3 million in sales through June this year, while losing 10 times that amount.
The disclosure also contains a warning from Trump Media & Technology Group's accountants, who said they have "substantial doubt about the company's ability to continue as a going concern."
The financial details about Trump Media & Technology Group were made public in a Monday filing from Digital World Acquisition Corp. (DWAC), a so-called special-purpose acquisition company, or SPAC, formed to merge with Trump's business. SPACs allow a company to sell shares to the public more quickly than in a traditional initial public offering, which requires more regulatory steps.
The filing marks "a crucial milestone in our journey towards the potential merger with TMTG," DWAC CEO Eric Swider said in a statement on Monday.
Trump Media Faces Financial Concerns
The accounting firm for Trump Media has issued a "going concern" warning, indicating that the company may not have enough cash to pay its debts and could default within the next year, as reported by S&P Global.
It should be noted that this warning is based on a specific moment in time, and there is a possibility that Trump Media's pending deal with DWAC could provide the necessary funding to fulfill its obligations and drive growth.
According to the filing, Donald Trump, the chairman and stakeholder of Trump Media, has agreed to make posts on Truth Social before any other competing social media platform.
Trump Media has not yet responded to requests for comment.
Financial Struggles
The filing reveals a company that is experiencing increasing losses despite modest sales. Trump Media reported revenue of $2.3 million in the first half of 2023, compared to no revenue during the same period in the previous year.
In addition, the company is burning through cash, with its cash reserves decreasing from $19 million to $2.4 million over the course of a year. The operating loss for 2022 was $23.3 million, although a change in value related to convertible notes resulted in a net profit of $50.5 million.
Trump Media Negotiating Debts with Lenders
Trump Media is currently in negotiations with its lenders to address its outstanding debts. In a recent filing, the company's management expressed concerns about its ability to pay off its liabilities and fulfill its obligations to lenders.
The filing states, "During the 12 months following the signing of these financial statements, management has substantial doubt that the company will have sufficient funds to meet its liabilities as they fall due, including liabilities related to promissory notes previously issued by the company."
