Donald Trump’s social media platform is losing money, but it could still be valued at over $5 billion.
Former President Trump’s Truth Social is set to become part of a publicly traded company after a long-delayed merger was approved.
On Friday, a shell company created solely to buy Truth Social’s parent company, Trump Media & Technology Group, approved the merger, The Associated Press reported.
The merger could be worth around $5.7 billion and a timely $3 billion boost for Trump as he faces mounting legal costs and penalties.
Despite the big number, the company, which Trump founded in 2021 after he was suspended from Twitter, as X was then known, has suffered considerable losses, which it has said it expects to continue “for the foreseeable future.”
Truth Social has a tiny footprint compared to other social media platforms. It had about five million active members in February of this year — including mobile users and website visitors, according to estimated research firm Similarweb, per CBS News.
It compares to TikTok which has over one billion monthly active users. Facebook has 3.049 billion monthly active users, and According to estimates, X/Twitter has more than 350 million worldwide.
‘I believe in TRUTH and MAGA’
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A securities filing by DWAC in November showed the Truth Social app lost $31.6 million from its launch in early 2022 to mid-2023, Reuters reported.
And Trump Media lost $49 million in the first nine months of 2023 on revenue of just $3.4 million, per The AP.
Jay Ritter, an IPO specialist at the University of Florida, told The AP that the losses meant “no way the company is worth anything like” the stock price suggests.
DWAC noted the risk posed by the company’s losses in filings with US regulators while pointing to the high failure rate for new social media platforms.
But this doesn’t seem to have bothered DWAC backers, many of whom are individual retail investors and some seem to be Trump fans.
“I am holding and not selling! I believe in TRUTH and MAGA,” a member of a Truth Social group posted on Friday, CBS News reported.
