Shares of Trump Media & Technology Group, the social media company founded by former President Donald Trumpplunged sharply on Monday after the company disclosed major losses in 2023.
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Trump Media, the company behind Trump’s social media platform Truth Social, reported a loss from operations of almost $16 million, plus interest expense of $39.4 million, while bringing in just $4.1 million in revenue, according to a Securities and Exchange Commission filing. That’s compared to a loss from operations of $23.2 million, plus interest expense of $2.0 million, on $1.5 million in revenue in 2022.
The disclosure came less than a week later Trump Media debuted on the Nasdaq under the ticker DJT. The company quickly shot to a more than $8 billion market cap, a rise analysts said had little to do with its underlying business and more to do with support for Trump. Several analysts lump Trump Media in with so-called “meme stocks” such GameStop, AMCduck Reddit — the laughter of which went public last month two much fanfare.
Trump owns 57.3% of Trump Media shares. Trump Media stock initially dropped more than 25% before closing down 21.5% to $48.66 per share.
Meme stocks refer to company shares that become wildly popular online and are traded feverishly by retail and individual investors, sending prices soaring regardless of the company’s actual operating results or prospects.
But the new disclosure could burst the short-lived bubble. The stock plunge wiped almost $2 billion in value from Trump Media.
Trump Media disclosed in the filing that it “lacks the financial resources it needs to sustain operations for a reasonable period of time,” which it defined as one year from Monday, raising “substantial doubt” as to its ability to continue operations. The company said it expects to continue incurring operating losses and negative cash flow “for the foreseeable future.”
The soaring valuation after debuting on Tuesday put a significant dent into short sellers’ pockets, who were down approximately $183 million year-to-date as of Thursday’s close, said Ihor Dusaniwsky, S3’s managing director of predictive analytics.
