Getting to the Truth of DJT Media

Another scam, more marks

Photo Credit: Getty: NurPhoto, edited.

The headlines today are all about Donald’s plummeting stock prices, but that’s just scratching the surface. 

The real story, the one that’s buried beneath the sensational headlines, is far more intriguing: Truth Social could be a front for a campaign finance scam.

There is no universe in which a company with an annual revenue of $4.1 million that lost $58 million in 2023 is worth $10 billion. 

The Trump Media merger with Digital World Acquisition was a massive infusion of cash to Donald — a gift masquerading as an investment.

In the world of politics, campaign financing has always been a contentious issue. The Federal Election Commission (FEC) has strict laws in place to regulate campaign contributions. The recent public listing of Truth Social raises new questions about potential loopholes in Federal election laws and the FEC’s inability to enforce them.

Traditionally, individuals and corporations show their support for a political candidate or cause by making direct donations. These donations are subject to FEC laws, which impose limits on the amount that can be donated and require transparency about the source of donations. 

Now that Truth Social is a publicly traded company, however, supporters have a new, surreptitious way to back Donald financially without having to make a direct political donation. And thereby bypassing FEC donation limits and disclosure requirements.

Donald’s most fervent supporters can help him out financially and, if the stock price rises, they stand to make a profit. If it falls, they can write off the loss as a tax deduction. 

Truth Social went public on March 26. Due to the rules set at the time of the public listing, Donald is restricted from selling any of his shares or using them as collateral for a loan for six months. This restriction period ends in September, right before the election.

While FEC laws prohibit foreign nationals from contributing directly to political campaigns, these laws do not apply to the purchase of publicly traded stocks.

As a result, foreign governments could potentially buy a significant amount of Truth Social stock, thereby gaining a financial stake in the platform and essentially putting Donald in the position of owing them a favor. More directly, massive amounts of cash funneled to Donald from the sale of shares gives him the opportunity to divert large amounts of cash into his cash-starved campaign. 

The potential for U.S. donors and foreign governments to circumvent FEC laws by buying Truth Social stock is a great cause for concern. The identity of those providing financial backing to Truth Social–and the extent of that backing — may be difficult to ascertain. This lack of transparency could, in turn, have serious implications for our democracy — as Donald becomes beholden to our nation’s adversaries.  

Still, today’s developments offer some positive news: the scheme might already be backfiring after only five days.

After news of the platform’s abysmal performance in 2023 was released, the stock dropped almost 22% and is down almost 25% since its first day of trading on March 27th. Without a solid financial foundation — which has never been the case for Truth Social — the company’s ability to operate, let alone pose a threat, is significantly compromised.

As of this writing, Donald’s net worth has already shrunk by $1 billion because he had to tell the truth about his failing company.

In compulsory SEC filings released today, the Trump Media & Technology Group was forced to disclose that it lost more than $58 million and barely generated any revenue in 2023.

The company also admitted that the “operating losses” would continue “for the foreseeable future.” 

Just a week ago, valuations of the company reached as high as $10 billion. 

After the news spread of the unlikelihood that Truth Social would ever turn a profit, shares of the stock plunged, erasing as much as $4 billion from the company’s valuation in just a week.

Financial experts are now warning Donald’s investors that Truth Social is a “meme” stock, the value of which is based on social media buzz rather than the actual financial strength of the company. 

This makes the stock extremely volatile and a very risky investment for anybody who buys it.

Finance professor Jay Ritter explains that Truth Social is “grossly overvalued.”

“Meme stock investors are usually buying on the basis of the greater fool theory of investing,” he added. “It is overvalued today, but I hope to make money selling it to an even greater fool tomorrow at an even higher price.”

In other words, Donald’s supporters have very likely just watched their money go up in flames.

There is little hope that Donald will ever be able to turn Truth Social into a successful social media platform. 

From technical glitches and user interface issues to a lack of unique content, Truth Social has struggled to provide a compelling alternative to established social media platforms. It’s half a million users are also shrinking, not growing (down 51% year-over-year). Even Threads, Mark Zuckerberg’s new social media platform, “has more than 10 times as many users as Truth Social.”

As the truth about Trump Media and its poor numbers came to light, investors began to abandon ship.

This exodus underscores an important lesson: When we look below the surface of Donald’s alleged success, all there is to see is unmet promises, lies, and failure. When investors saw the truth, they ran.