The share price of Trump Media closed trading 21.47% lower on Monday, hours after the social media app company tied to former President Donald Trump reported a net loss of $58.2 million on revenue of just $4.1 million in 2023.
Trump Media & Technology Group shares plunged by 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 lower than its high of $79.38 per share, which it hit last week on the heels of becoming publicly traded.
Despite Monday’s steep drop, the company’s market capitalization was still nearly $6.6 billion.
However, as of Monday’s closing price, the value of Trump’s Trump Media shares was approximately $3.8 billion, indicating a $2.5 billion decrease from the previous week.
Trump Media disclosed the loss for the previous year earlier on Monday in its 8-K filing with the Securities and Exchange Commission, which it filed after going public through a merger with a shell business.
According to the statement, interest expense of $39.4 million appears to account for a large portion of the net loss.
Trump Media CEO Devin Nunes stated that, “We are excited to be operating as a public company and to have secured access to capital markets.”
“Closing out the 2023 financials related to the merger, Truth Social today has no debt and over $200 million in the bank, opening numerous possibilities for expanding and enhancing our platform,” Nunes stated.
“We intend to take full advantage of these opportunities to make Truth Social the quintessential free-speech platform for the American people.”
According to the SEC report, Trump Media made a little $1.47 million in total revenue in 2022, but managed to turn a $50.5 million profit.
The primary cause of the profit was a $75.8 million “change in fair value of derivative liabilities.” The study stated that this relates to the valuation of the convertible promissory notes issued by Trump Media.
As per the corporation, Trump Media’s losses from the previous year can persist for a while.
A week after the company started trading on the Nasdaq under the ticker DJT, “TMTG expects to incur operating losses for the foreseeable future,” according to the filing.
Additionally, the filing alerts investors to the possibility that Trump’s ownership of the business could make it more vulnerable than other social media platforms.
Additionally, when TMTG issued a previous financial statement for the first three quarters of 2023, the business discovered “material weaknesses in its internal control over financial reporting,” which it disclosed to regulators.
The Trump Media stated on Monday that these “identified material weaknesses continue to exist.”
At $3.83 billion, Trump holds 57.3% of the shares in Trump Media.
According to a Forbes report from last week, Trump’s current holdings account for significantly more than half of his entire net worth.
Additionally, if Trump Media’s stock meets a number of price benchmarks over the course of the next three years, he will receive an additional 36 million shares of what are known as earn-out shares.
Each of these goals is set far below the opening stock price of the company on Monday.
Analysts point out that a portion of the company’s high valuation can be attributed to political supporters of Trump purchasing stock, since they are excited about owning a stake in a business that is so closely linked to the presumed Republican presidential nominee.
Later on Monday, Trump Media disclosed a number of risks associated with its most well-known shareholder in a 10-K filing to the SEC.
“TMTG’s success depends in part on the popularity of its brand and the reputation and popularity of President Trump,” the 10-K filing stated. “Adverse reactions to publicity relating to President Trump, or the loss of his services, could adversely affect TMTG’s revenues and results of operations.”
