Trump’s social media company barrels toward a financial disaster – The Average Joe
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    Trump’s social media company barrels toward a financial disaster

    victorlei

    March 23, 2024

    Reddit wasn’t the only social media company to hit the public markets last week. On Friday, Trump Media, the parent company behind Donald Trump’s Truth Social app, scored approval to merge with a SPAC, Digital World Acquisition Corp ($DWAC). At a $5.7B valuation, Trump’s 60% stake is valued at over $3B, pushing the stock up over 130% this year. But beware — it could soon face selling pressure.

    • Trump may be forced to sell part of his shares to foot his $454M bill as part of a civil fraud case settlement.
    • Although Trump can’t sell his shares for six months, there’s a possibility that family members and allies on the company’s board could waive this restriction.

    The math isn’t mathing: In the first nine months of 2023, the company made just $3.38M in revenue with a $49M loss. And regardless of what it made in the final quarter, a $5.7B valuation brings its price-to-revenue multiple well over 1000x. Last September, the company almost ran out of cash — at one point, it had just $1.8M in the bank. Nonetheless, the merger injects much-needed cash of $300M into Trump Media — even if it also provides its nearly 400K investors reasons to run.

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