Stock of Trump’s social media company plummets after earnings report

Stock of Trump’s social media company plummets after earnings report

Truth Social, owned by Trump Media & Technology Group, saw its stock prices fall over 20 percent on Monday. The former president of the United States, Donald Trump, owns the social media company, which reported losses of millions in its first earnings report as a publicly listed company. Last year, the company had a net loss of $58.2 million, and this year it remains at $50.5 million. Trump Media warned of difficulties repaying debts, with expectations of ongoing operating losses and negative cash flow.

This information caused Trump Media’s stock to plummet by 21 percent to $48.66. Despite the drop, the company’s market value remains over six billion dollars. However, analysts believe that Truth Social is overvalued and lacking a clear path to profitability, making the stock unsustainable in the long run. The company, although hyped, is nowhere near becoming a true competitor to larger platforms like Reddit, which has a market value of eight billion dollars.

While Trump Media’s revenue increased to $4.1 million last year, Reddit’s revenue reached $800 million. Trump Media’s turnover decreased in the fourth quarter of last year, raising concerns about its future prospects. Reddit boasts 73 million active users, while Truth Social has not disclosed its user numbers but reports 8.9 million accounts created.

Ultimately, the stock market reaction to Trump Media’s earnings report highlighted the challenges that the company faces in establishing itself as a significant player in the social media landscape. Despite initial hype and a high market valuation, the company’s ongoing losses and uncertain path to profitability raise doubts about its long-term viability as a major competitor in the industry.

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