Trump Media lost more than $300 million last quarter on very little revenue

Trump Media lost more than $300 million last quarter on very little revenue

Trump Media & Technology Group lost more than $300 million in the first quarter and generated very little revenue, owner Truth Social announced in a press release Monday.

The decision will raise additional questions about the multibillion-dollar valuation of the newly public company, which is majority-owned by former President Donald Trump.

Trump Media (DJT) reported a loss of $327.6 million in the first three months of the year driven mostly by one-time losses associated with the deal that took the company public earlier this year. The company lost $210,300 a year earlier.

The company blamed the loss on non-cash expenses from the conversion of promissory notes and the write-off of prior liabilities.

Trump Media reported an operating loss of $12.1 million, with some of that driven by a one-time payment related to the closing of its merger with the blank check company earlier this year.

The company generated just $770,500 in revenue, marking the second straight quarter in which its revenue totaled less than $1 million.

“I can’t stress enough how unusual it is for a company with such small revenues to have such a high valuation,” Matthew Kennedy, senior IPO market strategist at Renaissance Capital, told CNN in an email.

In a 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 was just starting to grow and expressed confidence that new products such as streaming would improve its results in the future.

“But if they’re not focused on earnings, public investors have little to go on. What metrics can we look at? How can investors determine if a company is on the right track?” Kennedy said. “The company doesn’t provide user metrics (although we can see app downloads or Trump followers). It takes a lot of faith, and for now, shareholders seem willing to give a great deal of faith. That can change quickly, as we saw in early April.”

Trump Media said it has “sufficient” cash to fund the business “for the foreseeable future.” The company listed a cash balance of $274 million at the end of March – an amount boosted by its deal to go public.

“After an unprecedented, years-long process, we have completed our merger and eliminated most of the merger-related expenses, leaving the Company well capitalized and supported by a group of retail shareholders who believe in our mission to provide free services. -speech beachhead against Big Tech censorship,” Trump Media CEO Devin Nunes said in a statement. `

Nunes also said Trump Media’s cash balance gives the company an opportunity to explore potential mergers and acquisitions.

Experts say the price tag on Trump Media stock defies logic given the company’s financial results and small footprint in social media.

Jay Ritter, a professor of finance at the University of Florida’s Warrington College of Business, said “revenues are still anemic” for Trump Media.

“While the company is not burning through its ample cash reserves quickly, it is not generating much revenue, suggesting that there is no reason to think that the company will turn around and become profitable in the future,” Ritter said.

Despite all the fanfare for its public listing earlier this year, Truth Social remains a very small player in social media.

In April, the conservative-friendly social network saw 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) has more than 34 million users on iOS and Android, while Instagram Threads has 3.5 million.

Trump Media said its finances were audited 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 did not make allegations of wrongdoing against Trump Media, which was not mentioned in the charges against the auditor.)

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