Shares of Trump Media & Technology Group rose Tuesday in pre-market trading, following the release of the company’s first quarter earnings report on Monday.
The Context
TMTG, the parent company of former President Donald Trump‘s social media platform Truth Social, reported a net loss of $327.6 million for the first quarter of 2024. This loss was primarily attributed to non-cash expenses related to the company’s recent merger with Digital World Acquisition Corp., a special purpose acquisition company (SPAC).
TMTG posted a net loss of $210,300 the year before.
What We Know
According to the earnings report, TMTG generated $770,500 in revenue for the quarter, which the company said was largely the result of its “nascent advertising initiative.”
CHRIS DELMAS/Getty Images Entertainment/Sky UK/Peacock
The company’s revenue was down from $1.1 million in the same period last year.
Despite these figures, the stock price saw a post-market increase, indicating investor confidence in the company’s long-term plans.
CEO Devin Nunes emphasized the company’s focus on long-term product development over short-term revenue gains. Nunes announced plans to enhance the Truth Social platform with new features, including a live TV streaming service. The company has already signed contracts with a data center partner and a hardware vendor to support this initiative.
Views
“After an unprecedented, years-long process, we have consummated our
merger and dispensed with the vast bulk of merger-related expenses, leaving the Company 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,” Nunes said in a statement alongside the earnings report.
“TMTG is well-positioned at this early stage to grow quickly and fulfill our mission,” he added.
Matthew Kennedy, senior IPO market strategist at Renaissance Capital, pointed out the unusual nature of TMTG’s high valuation despite its minimal revenue in an email to CNN. “It requires a lot of trust from investors, and for now, shareholders seem to be willing to extend that trust,” he said.
Jay Ritter, a finance professor at the University of Florida, was more skeptical. He highlighted the company’s low revenue generation and the significant non-cash expenses as red flags. “There is no reason to think that the company will turn the corner and become profitable in the foreseeable future,” Ritter told CNN.
What’s Next
TMTG stated that it has sufficient capital to fund its operations for the foreseeable future.
“We are particularly excited to move forward with live TV streaming by developing our own content delivery network, which we believe will be a major enhancement of the platform,” Nunes said in his statement.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
