In a recent regulatory filing with the Securities and Exchange Commission (SEC), Digital World Acquisition Corp, the special purpose acquisition company planning to merge with Trump Media & Technology Group, has revealed the financial challenges faced by Truth Social, Donald Trump’s social media project.
Since its inception, Truth Social has suffered substantial losses, totaling $73 million, raising concerns about its sustainability. The filing says the platform posted a $50 million loss in 2022, followed by an additional $23 million loss in the first half of 2023, according to a Forbes report.
Sales fall short of expectations
Launched in 2022 as a conservative alternative to major tech platforms, Truth Social aimed to attract advertisers looking to connect with Donald Trump’s large following. However, a recent official announcement gives a different picture. Truth Social’s owner, Trump Media & Technology Group, reported just $2.3 million in sales through June of this year, a stark contrast to a $73 million loss.
The announcement also includes a warning from Trump Media & Technology Group’s accountants expressing “significant doubt about the company’s ability to continue as a going concern.”
This is the first time Truth Social’s financials have been made public, revealing that despite Trump’s support, the platform has struggled to generate significant revenue for its parent company, TMTG. Since their launch, Truth Social and TMTG have combined revenue of $3.7 million, an amount overshadowed by significant losses.
The financial challenges are compounded by the complex balance sheet, which is affected by the “change in the fair value of derivative liabilities”, which is not related to the company’s day-to-day operations. The application highlights the obstacles that Truth Social faces after establishing itself as a competitive operator in social media.
Originally an alternative to big tech giants like Facebook and Twitter (now X), Truth Social got a boost in May 2022 when Donald Trump pledged to use it as his primary social media platform. However, the recent financial announcement underscores the platform’s efforts to turn Trump’s endorsement into continued revenue and success.