Donald Trump’s social network Truth Social is not getting off the ground despite the presidential election campaign. Trump Media and Technology Group (TMTG) sales fell below the million dollar mark in the second quarter (ended June). This was the first full quarter since the IPO. At the same time, expenses have increased several times, so that sales and marketing expenses alone now exceed income. The result is a fivefold operating loss.
Advertisement
Truth Social leaves the distribution of online advertising to an external partner who does not do it for God’s reward. Initially, this company may have offered special introductory terms, which have now expired. Accordingly, sales fell by 30 percent to $836,900. If you subtract the costs directly associated with this business relationship, Truth Social earned $800,700 in three months. Industry leader Meta Platforms achieved this turnover in 161 seconds.
This is offset by costs that have increased several fold. Sales and marketing expenses alone have tripled to $1.2 million. Research and development expenses more than doubled to $4.9 million. The largest share is attributable to administration and general: $13.4 million, 5.8 times that of the second quarter of 2023. Overall, operating costs quadrupled from $4.9 million to $19.4 million.
Five times operating loss
This resulted in an operating loss of $18.7 million, five times the annual loss. At least TMTG no longer has any significant debt because it was able to convert the associated bonds into shares. At the end of the quarter, the company had reserves of approximately $344 million. From this, and from financial accounting entries regarding the bond conversion, TMTG was able to earn at least $2.3 million in interest.
Due to the lack of profits, Trump Media & Technology Group does not pay the corresponding taxes. Therefore, the pre-tax loss is equal to the net loss, i.e. $16.4 million. This is 28 percent less than a year ago. Prior to the IPO, TMTG had high debt and related interest charges. The notes state that the cash reserve is intended to ensure the company’s survival for at least twelve months For quarterly data,
Beta testing of the streaming service has begun
As a result of his announcement on Tuesday evening, the TMTG stock market price fell to the single-digit percentage range to less than $24. This means that three months after Truth Social announced disastrous figures for the first quarter of the year they are worth less than half their value. Nevertheless, the stock market valuation is still around $4.7 billion. This has nothing to do with the company’s economic growth. TMTG is a so-called meme stock whose buyers bet on the popularity and political successes of Donald Trump. The presidential candidate is not allowed to sell his shares until the end of September at the earliest.
TMTG operates the microblogging service Truth Social and is working on its own streaming service for “news, Christian content, and family-friendly programming,” which will be delivered via an in-house content delivery network (CDN). Beta testing of the first phase of the streaming offering began in the United States last week; the CDN currently consists of a single location for streaming servers. If all goes well, first sales should take place in 2025.
(DS)
