Truth Social: Trump's Controversial Social Media Venture and Stock

Former President Donald Trump's social media platform, Truth Social, struggles to make profit despite drawing retail investors and potential ad revenue.

### Truth Social: A Controversial Social Media Platform Backed by Donald Trump
* 📊  Truth Social, launched in Q1 2022, is structured similarly to Twitter but with a conservative bent, aiming to be an **alternative to liberal platforms**.
* 💰  Despite only generating **$770,000 in revenue in Q1 2024**, Trump Media Group's market capitalization reached about **$6 billion by the end of that quarter**.
* 📈  The stock price, which debuted at **$10 per share**, has **tripled for some investors**, but analysts are skeptical of its high valuation given the **low revenue**.
* 👥  The platform's user base is significantly smaller than major social media platforms, with estimates of **5.3 million total visits in June 2024** compared to **billions for Facebook and Twitter**.
* 🤔  Many analysts believe that Trump's ownership stake (about **65%**) is the primary draw for retail investors, rather than the platform's **potential profitability**.
* 💼  Trump could potentially **cash out his position as early as September 2024**, which may **impact the company's future performance**.
* 🛡️  Truth Social's conservative focus and reliance on ad revenue pose challenges for **broadening its user base and profitability**.
* 🔒  There are concerns about Trump's potential motives for the platform, with questions about whether it's a **long-term venture** or primarily a **financial opportunity** for him.

Truth Social is a social media platform majority owned
by former President Donald Trump and his business partners. These investors say they want to end Big
Tech's assault on free speech. The type of person to trade X, now Twitter or Facebook,
for Truth Social, tended to be very passionate Donald Trump
supporters. I don't think that Truth Social was ever a rational
endeavor. I see it as a vanity project. After a buzzy launch, the project has the potential to
make the former president a lot of money, despite its struggle to make a profit. There's anybody out there that has held since the $10
IPO price, they've roughly tripled their money. It's certainly not turning a profit right now. A lot of analysts say that it is Trump who is the big
draw for these retail investors. This has all the ingredients of a good old fashioned
meme stock rally. Share prices for the company can move when the former
president breaks big news on Truth Social.

Mr. Trump used the platform to confirm that a bullet grazed his right ear in a failed assassination attempt, and to comment on President Biden dropping his 2024 presidential campaign. So what is Truth Social and how much money can it make? A team led by Donald Trump launched Truth Social in the first quarter of 2022, after the former president was permanently banned from Twitter. Truth social itself is structured very similarly to X, formerly Twitter. So where X, formerly Twitter may have a tweet. Truth social calls those truths where X formerly Twitter may have a retweet. Truth Social calls those ReTruths. Generally they have the same sort of timeline setup. The idea of Truth Social to begin with was to bring an alternative to liberal platforms. It has a conservative bent. It was framed from the start around being sort of this bulwark against big tech and woke ideology and liberal media and all the rest of that. And its main revenue, its only revenue, in fact, comes from advertising sales.

Truth Social declined to verify its usage data with CNBC and described outside estimates as fake. Normally, social media companies post KPIs, key performance indicators. They show how many daily active users they have. Trump Media is not posting any of that information right now. The analytics firm SimilarWeb estimates that True Social.com received 5.3 million total visits in June 2024. Compare that to about 7.3 billion for X.com, formerly known as twitter.com, and 15.3 billion total visits from Meta's facebook.com alone, which has had two decades to build its audience. This count doesn't include Meta's audiences on Instagram or other platforms. Meta has monetized its audience with a little over $35.6 billion in advertising revenue in the first quarter of 2024. Truth Social earned $770,000 in the same period. Truth Social and other emerging platforms like Rumble and Telegram say they emphasize free speech and creator

control of content. It's super important what Elon did as a nonprofit,
but it's going to be tough as a business. What about what about Truth Social? Um, they have a they have a few other problems they
have to solve first. Platforms that do make money and that they are
successful is that they appeal to a broad cross section of all possible users. And on truth Truth Social, it's pretty much mostly
about politics, and that's always going to limit potential user base of the platform. Truth Social is the primary product of Trump Media and
Technology Group. The company describes itself as a powerhouse to rival
the liberal media consortium, which it considers to be Meta, Netflix, Alphabet, and Amazon, among others. Trump Media and Technology Group is the result of this
Spac merger that was just completed in late March. A Spac, or special purpose acquisition company, is
somewhat similar to the blank check companies of the 1990s.

These blank check company vehicles were disallowed. Spacs grew out of that as an attempt to originally
create a legitimate company with real value. The entity that backs Truth Social opened its doors to
investors on September 8th, 2021. Shares were sold at $10 per unit, raising $287.5
million in proceeds. People that bought when it was tens higher than that
have lost a lot of money. So you have the cash in the Spac combined with Truth 
Social is now the public company, and the holders, including Trump, now hold shares in that
combined company. The Trump Media group trades on the Nasdaq, the world's
second biggest stock market exchange. It began to trade publicly on March 26th, 2024. It trades on the Nasdaq under the banner DJT, which are
Trump's initials. That's how its market capitalization is now numerous
billions of dollars, even though its only

product doesn't create really much of any revenue at
the moment. In July, Trump Media was added to the Russell 1000 and 
3000 indices. The stock traded at about $33 per share at the end of
2024's first quarter, giving it a market capitalization of about $6 billion. Analysts are often vocally baffled about why the market
capitalization for this company is so high. The revenue and the fundamentals of the company just
don't reflect that. In its first quarter earnings report, it showed that
it had just about $770,000 in revenue, and it posted a net loss of over $327
million. So it's not bringing in a lot of money. It's $3 million in revenues. You have $5 billion out of a company that's doing 3
million in revenue. That's the numbers as they currently stand. A lot of analysts say that it is Trump who is the big
draw for these retail investors.

And there are over 600,000 retail investors who are currently bought into the stock, according to Trump Media. Some market analysts say investing in the company is an act of faith. I don't know whether the stock is going to go up or go down, but one thing is certain Donald Trump's going to make a lot of money. Are they looking at the projections of ad revenue? I kind of doubt it. If they were to look at it, would they believe the projections when ad revenue was very, very low today? I don't know. So I don't know that in this case the projections are driving the share price. It could be, but I think it's more likely the share price is explained more by the, you know, the meme stock phenomenon. Donald Trump owns about 65% of the company behind Truth Social. That stake alone was worth over $3.9 billion at the end of June 2024, not including

his warrant options on the same stock. Trump's stake is huge. He had something like a 57-58% stake in Trump media,
and about a month after the company went public and
started trading on the Nasdaq, he got 36 million more shares, and that equates to a couple
billion dollars, even as the stock price is swinging wildly up and down. And so it's been a huge windfall for him. So that raises a lot of questions about what Trump
sees as the value of this social media company. If he's going to just dump his stake, take
the money and run, and leave the company kind of in the lurch, or if he really believes that it
is going to do what it says it's going to do, which is create this big bulwark against big Tech. But in the meantime, it's been a pretty good trade for
him so far. SEC filings for the company say it could potentially
fail to live up to its promise to generate users

advertisers. Social media traditionally makes money from
advertisements, and even more importantly, from harvesting and analyzing and sharing our personal
data. Truth Social rely on this model for revenue. The short answer is probably not because the site is so small. It's significantly
smaller than Facebook and Twitter and even something like threads. There have also been a tangle of other lawsuits, some
of which are still ongoing. Trump Media CEO and former Congressman Devin Nunes
suggested that a small group of firms may artificially be driving the stock price lower. He wrote a letter to the Nasdaq, saying that over 60%
of the stock's trading activity came from four firms: Citadel Securities, Virtu Americas, G1 Execution
Services, and Jane Street Capital. Truth Social and the companies mentioned did not
respond to CNBC's requests for comment in time for this report's publication. Truth Social could alter the 2024 election by
bolstering the former president's finances and stirring

up support among his base. It solidifies the base for Donald Trump and other right-leaning politicians. They all get together, they support one another. They reinforce each other's beliefs. Donald Trump could owe as much as $550 million from pending lawsuits. Trump earlier this year was found liable for business fraud in New York. He was ordered to pay a massive multi-hundred-million-dollar settlement that's currently being appealed. So he doesn't have to pay that right now. And there's really no specific telling when that bill will come due if it ever does, because he might win the appeal and it could be litigated for many more months or potentially years. So in the meantime, if he's able to cash out some of this stake in Trump media, then he could potentially put that towards some of his legal fees. The former president could cash out his position as soon as September 2024, according to the lockup

agreement between early investors. I believe that Trump is locked up for six months. At that point, he is going to be able to sell his
shares. In the meantime, might he have been hedging? Might he have an arrangement with a bank under which
he's able to cash out? He's not supposed to under a lock up. Typically, if he hasn't done that already, uh, he'll
be able to do that in a few months. Until then, the extent of the impact could be more
limited. Truth Social appears to be struggling to grow its US
user base. If the stock's price falls below $10 per share ahead of September, the trade could turn out to
be a loss for the early investors, not to mention the bigger losses for the traders who bought at the top. Certainly, the most followed individual on Truth Social
is Donald Trump, and he gets a lot of traction, a lot of engagement for all of his posts on that platform.

It solidifies the base for Donald Trump and other
right-leaning politicians. For example, on June 19th, Donald Trump published a
truth about Paul Ryan. Paul Ryan had come out against Trump, and Trump was
kind of lashing back. The very next day, on June 20th, we saw that hashtag
Paul Ryan was trending. Trump once had an exclusive contract to post on Truth
Social, but communicating exclusively on the platform could limit the former president's reach. His account on X, formerly Twitter, has over 87
million followers. On Truth Social, the count is closer to 7 million. You could say that, in a sense, this started because of
January 6th, the Capitol riot. Within two days of January 6th, Trump had been kicked
off of Twitter, Facebook, YouTube, and Instagram. And it was the next month that he started
Trump Media and Technology Group. Trump is possibly, arguably, their biggest draw as a
company.

It's what differentiates them from other right-leaning
Twitter clone social media sites. It is what brings a lot of people to the platform.

How Truth Social Makes Money For Former President Trump

Welcome to the official YouTube channel for CNBC. From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.

For real-time news updates from around the world, visit: http://www.cnbc.com

For CNBC's primetime TV lineup, visit http://tv.cnbc.com

For CNBC's International YouTube channel, visit: http://www.youtube.com/cnbcinternational

CNBC

Truth Social: Donald Trump's Venture into Social Media

Truth Social is a social media platform launched by Donald Trump as an alternative to mainstream liberal platforms, aiming to protect free speech.

The platform, structured similarly to Twitter, has gained attention mainly due to Trump's involvement, experiencing a surge in share prices and a buzzy launch.

However, despite the potential for profit, it is struggling to make a significant financial impact and lags far behind major social media platforms in terms of usage and advertising revenue.

The Challenges Faced by Truth Social, Trump's Media Venture

Truth Social, the main product of Trump Media and Technology Group, is struggling to attract a broad user base as it primarily focuses on politics.

Despite being backed by a SPAC merger and having a high market capitalization, the company is facing significant financial losses, with low revenue and high net loss.

The inexplicably high market capitalization is believed to be driven by retail investors' fascination with Trump, raising concerns about the company's long-term sustainability.

Trump Media's Stock and Truth Social's Future

Over 600,000 retail investors have bought into Trump Media's stock, seen as an act of faith by some analysts.

Donald Trump's massive stake in the company has been incredibly profitable, raising questions about his long-term plans for Truth Social.

The social media platform's potential for ad revenue and user growth is uncertain, as it faces challenges with its size and ongoing lawsuits, while also being accused of stock price manipulation by a small group of firms.

The Impact of Trump's Involvement in Truth Social

Donald Trump's involvement in Truth Social is a way to strengthen support among his base and right-leaning politicians.

Trump is facing potentially massive legal fees from pending lawsuits, but he may be able to use the cash from his stake in Trump Media to help pay for them.

The struggling growth of Truth Social's US user base could lead to financial losses for early investors and traders.

The Impact of Truth Social on Donald Trump's Reach and Influence

Donald Trump's exclusive contract with Truth Social may limit his reach compared to his former platform, X.

Trump's banning from multiple social media platforms led to the creation of Trump Media and Technology Group.

The group's reliance on Trump's presence sets it apart from other right-leaning social media sites.