Trump’s new media company has suffered huge losses

Donald Trump’s media company lost hundreds of millions of dollars in the first quarter of the year according to a new earnings report that was filed in May with the Securities and Exchange Commission. Here’s what the report revealed. 

Trump Media & Technology Group, often shortened to Trump Media, disclosed in a May 21st filing with the Securities and Exchange Commission that it lost $327.6 million in the first quarter of the year. But that wasn’t the worst revelation. 

Trump Media not only lost hundreds of millions of dollars but also didn’t earn very much in the first quarter of the year with the company reporting $770,500 in revenue, which is a major issue for the former president’s new media business. 

NBC News reported the new filing is one of the first measures of Trump Media’s health as a company since it went public following its merging with the former president’s other media business Digital World Acquisition Corp.

Much of Trump Media’s losses in the first quarter were due to non-cash expenses due to the merger process, and the company reported $311 million in its first quarter losses came from expenses related to its merger in March. 

Politico noted that Trump Media posted a loss of just $210,300 one year earlier as well as revenue of $1.1 million. Much of the recent revenue Trump Media did earn came from what it termed its “nascent advertising initiative.”

“At this early stage in the Company’s development, [Trump Media & Technology Group] remains focused on long-term product development, rather than quarterly revenue,” Trump Media explained in its earnings news release as quoted by Politico. 

Trump Media CEO David Nunes wasn’t too worried about the news when he issued a statement on May 21st emphasizing the company was prioritizing long-term product development over short-term growth according to Newsweek. 

“After an unprecedented, years-long process, we have consummated our merger and dispensed with the vast bulk of merger-related expenses,” Nunes explained before he went on to note the good position the company was in. 

Nunes said that Trump media was now left “well-capitalized and supported by a legion of retail shareholders who believe in our mission to provide a free-speech beachhead against Big Tech censorship,” adding the company was well-positioned to grow. 

Nunes also announced plans for Truth Social, of which Trump Media is the parent company, that included several enhanced features such as a live television streaming service. Contracts had allegedly already been signed with data partners and hardware vendors to support the new initiative. 

However, some investors don’t agree with Nunes’ assessment. Matthew Kennedy is a senior IPO market strategist with Renaissance Capital and explained the many issues with the company to CNN through email. 

Kennedy emphasized the unusual nature of Trump Media’s very high valuation and little revenue, explaining that “public investors have very little to go on. What metrics can we look at? How can investors determine if the company is on the right track?”

“The company does not provide user metrics… It requires a lot of trust, and for now, shareholders seem to be willing to extend an enormous amount of trust. That can quickly change, as we saw in early April,” Kennedy explained. 

CNN reported that Trump Media believes it has “sufficient” cash on hand to fund the business “for the foreseeable future,” noting that the company did list a cash balance of $274 million as of the end of March.

Trump Media still continues to command a high valuation according to Axois, which noted in its reporting on the company’s earnings filing that Trump Media still commands a “market value north of $6 billion.”

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