Home Markets Trump Media lost $58 million last year, SEC filing shows

Trump Media lost $58 million last year, SEC filing shows

by SuperiorInvest

This photo illustration shows an image of former President Donald Trump reflected on a phone screen displaying the Truth Social app, in Washington, DC, on February 21, 2022.

Stefani Reynolds | AFP | fake images

The share price of Trump media closed trading down 21.47% on Monday, hours after the social media app company linked to former President Donald Trump reported a net loss of $58.2 million on revenue of just $4.1 million in 2023.

Trump's media and technology group Shares plunged more than 25% around 1:08 p.m. ET before recovering slightly later in the day.

Trump Media's closing price was $48.66 per share, more than $30 less than its high of $79.38 per share, which it reached last week immediately after going public.

Despite Monday's sharp drop, the company's market capitalization was still almost $6.6 billion.

But at Monday's closing price, Trump's shares in Trump Media were worth about $3.8 billion, or about $2.5 billion less than last week.

Earlier Monday, Trump Media in its 8-K filing with the Securities and Exchange Commission since going public through a merger with a shell company, disclosed last year's loss.

Much of the net loss appears to come from $39.4 million in interest expense, according to the filing.

When asked about the results, a spokesperson for the company, which owns the Truth Social app commonly used by the former president, referred CNBC to a news release the company issued Monday night.

In that statement, Trump Media CEO Devin Nunes said, “We are excited to operate as a public company and have secure access to the capital markets.”

“As we close 2023 financials related to the merger, Truth Social today has no debt and has over $200 million in the bank, opening up numerous possibilities to expand and improve our platform,” Nunes said.

“We intend to make the most of these opportunities to make Truth Social the ultimate free speech platform for the American people.”

The SEC filing shows that in 2022, Trump Media had a net profit of $50.5 million and total revenue of just $1.47 million.

The gain was overwhelmingly due to $75.8 million realized from a “change in fair value of derivative liabilities.” This refers to how Trump Media's convertible notes were valued, according to the report.

The losses seen last year by Trump Media could continue for some time, according to the company.

“TMTG expects to incur operating losses for the foreseeable future,” said the statement, which came a week after the company began trading under the symbol DJT on the Nasdaq.

The filing also warns shareholders that Trump's stake in the company could put it at greater risk than other social media companies.

TMTG also disclosed to regulators that the company had identified “material weaknesses in its internal control over financial reporting” when it prepared a previous financial statement for the first three quarters of 2023.

As of Monday, Trump Media said these “identified material weaknesses continue to exist.”

More news about Donald Trump

Trump owns 57.3% of Trump Media shares, a stake valued at $3.83 billion.

Forbes reported last week that Trump's existing stock accounts for more than half of his total net worth.

He will also receive another 36 million shares of so-called earnings stock over the next three years, provided Trump Media shares during that time reach a series of benchmark prices. All of these targets are well below the company's stock price early Monday.

Trump Media's stock price soared when its shares began trading on Tuesday, several days after the company merged with a special purpose acquisition company, Digital World Acquisition Corp., which traded under the symbol DWAC. The newly merged company now trades under Trump's initials, DJT.

Analysts say the company's high valuation is partly due to stock purchases by Trump's political supporters, who are excited by the idea of ​​owning part of a company so closely associated with the presumptive Republican presidential candidate.

However, that enthusiasm creates unique risks for the company. The new 8-K filing says Trump Media “may be subject to greater risks than typical social media platforms due to the focus of its offerings and the involvement of President Trump.”

In a subsequent 10-K filing with the SEC on Monday, Trump Media listed several risks related to its most famous shareholder.

“TMTG's success depends in part on the popularity of its brand and the reputation and popularity of President Trump,” the 10-K document said. “Adverse reactions to publicity related to President Trump, or the loss of his services, could adversely affect TMTG's revenues and results of operations.”

That filing also noted: “President Trump is the subject of numerous legal proceedings. An adverse outcome in one or more of the ongoing legal proceedings could adversely affect TMTG.”

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