Truth Social, the social media platform owned by the Trump Media & Technology Group, is making headlines. Investors recently got a glimpse into the financials of the company, and their reaction was not positive. In fact, shares in the firm plummeted by over 15 percent, resulting in billions of dollars being shaved off its market cap.
As of now, shares in Truth Social are trading in the $51 range, a significant drop from the previous trading day’s close of just under $62. This drop in value has also affected former President Donald Trump’s personal stake in the firm. With 78.5 million shares, which represents about 57% of all outstanding shares, Trump’s stake has declined from a peak of $6.25 billion to $4.25 billion.
The main cause for concern is the financial performance of Trump Media. Last year, the company reported a net loss of $58 million on revenues of just over $4 million. As a result, the price-earnings ratio of the firm is in negative territory, suggesting that the stock could continue to fall unless dedicated fans of the former president step in to support it.
In addition, Trump Media’s price-to-sales ratio is significantly higher than that of social media peers like Reddit and Snap. While Trump Media has a ratio of 1,470, Reddit and Snap have ratios of 9 and 4 respectively. This raises questions about the company’s ability to generate revenue, especially considering its low core user base and lack of success in attracting major advertisers.
It remains uncertain how Trump Media plans to turn the situation around and start making money from Truth Social. While there is always the potential for increased revenue in the future, the current challenges posed by the company’s financial status and limited user base make it difficult to determine a clear strategy.
So, as investors react to the financials of Truth Social, it will be interesting to see how the platform evolves and whether it can overcome these challenges to establish a solid financial footing.
Stay tuned for more updates on this developing story, on Fan Reviews News.
