Truth Social’s parent company lost almost $23m (£18.7m) in the first half of this year alone, according to a new securities filing that raises concerns about its “ability to continue”.
The filing released on Monday marks the first time any financial details about Donald Trump’s social media platform have been shared publicly, according to The Hollywood Reporter.
Truth Social was launched in February last year after Mr Trump was banned from most social networks in the aftermath of the 6 January 2021 Capitol riots.
The former US president – who announced his candidacy for the 2024 elections in November last year – has since returned to X (formerly known as Twitter), but says Truth Social is still his primary social media platform and that he won’t post anywhere else until six hours after he sends a “Truth”.
Having Mr Trump on board has not translated into revenue for the platform’s parent company Trump Media & Technology Group (TMTG), however.
Over the first half of 2023 it has lost $23m while bringing in only $2.3m in net sales, the filing showed.
This has raised doubts about the viability of the company and its social media startup, according to the filing.
“TMTG’s independent registered public accounting firm has indicated that TMTG’s financial condition raises substantial doubt as to its ability to continue as a going concern,” the company noted in the filing.
The company said the “management has substantial doubt that TMTG will have sufficient funds to meet its liabilities as they fall due, including liabilities related to promissory notes previously issued by TMTG”.
The remarks were made in its assessment of business till the end of December last year and as of 30 June 2023.
Concerns have also been raised over Digital World Acquisition Corporation (DWAC), a Special Purpose Acquisition Company (SPAC), that had some years ago announced plans to merge with TMTG.
An SPAC is a shell corporation which raises money by listing itself on a stock exchange with the aim of using the funds for a merger with a different and usually more well-known entity.
The filing said DWAC has “until 8 September 2024 to consummate a business combination”.
It raised concerns that both TMTG and DWAC may not survive unless this merger is completed.
“It is uncertain that Digital World will be able to consummate a business combination by this time. If a business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of Digital World,” the filing said.
“TMTG believes that it may be difficult to raise additional funds through traditional financing sources in the absence of material progress toward completing its merger with Digital World,” the filing further said.
“A number of companies that had licence agreements with President Trump have failed. There can be no assurances that TMTG will not also fail,” the filing said.
TMTG also cited a number of risks to its business in the new filing, including a dedicated section titled “Risks related to our chairman, president Donald J Trump”.
The section lists his ongoing legal hurdles.
“TMTG’s success depends in part on the popularity of its brand and the reputation and popularity of its chairman, president Donald J Trump,” the filing said.
“The value of TMTG’s brand may diminish if the popularity of President Trump were to suffer. Adverse reactions to publicity relating to President Trump, or the loss of his services, could adversely affect TMTG’s revenues, results of operations and its ability to maintain or generate a consumer base.”
