The collapse of Trump Media & Technology Group (TMTG), the company behind Truth Social, has been swift and brutal. Despite going public via SPAC in late March, the stock price has plummeted, wiping out over 50% of its value. This is not a political story, but a business one, with TMTG's poor financials and lack of transparency to blame.
TMTG's total revenue in 2023 was a meager $4.1 million, with losses of $58 million. Its stock was trading at an astronomical 2,000 times its annual revenue, a far cry from the more reasonable 35 times revenue of high-flying Nvidia. The company's refusal to disclose key performance indicators, such as user numbers and ad sales, only adds to the skepticism.
Despite claims of a bright future, TMTG's prospects look bleak. Its plan to launch a streaming-TV platform for creators who can't find an audience elsewhere may not be enough to save it. The company's CEO, Devin Nunes, has admitted to having millions of dollars in the bank, but this may not be enough to stem the tide.
Shareholders are in for a bumpy ride, with the stock on a steady downward trajectory. The company's plan to issue more shares will raise cash but dilute the value for current shareholders. Even Trump himself, who owns over half of the company's shares, is subject to a lockup period that prevents him from selling until September.
The speed of TMTG's collapse is surprising, but not the fact that it has happened. The company's poor financials and lack of transparency made it a risky investment from the start. As the reality of the situation sets in, the Trump Media & Technology Group illusion is coming undone.
No comments:
Post a Comment