In a recent filing, accountants for Trump Media and Technology Group, the parent company for his online social media platform Truth Social, have warned that they have “substantial doubts” that the company will have “sufficient funds to meet its liabilities.” Team Trump’s aspirations of the platform becoming the “centerpiece of a movement” look increasingly unlikely.
Truth Social Struggles With Popularity
CNN Business has recently reported that Trump’s social media platform has not gained much popularity, stating Truth Social had “861,000 monthly active users on iOS and Android as of October amounting to barely 1% of those on X, according to Similarweb.”
There Is No Guarantee the Company Will Survive.
In a recent filing reported by CNN, it states, “TMTG has suffered negative cash flows and recurring losses from operations that raise substantial doubt about its ability to continue as a going concern,” CNN Business also stated the filing cited “an assessment from an independent accounting firm and financial statements.”
Truth Social Losses Equal $73 Million.
Digital World Acquisition Corp. (DWAC), the entity poised to merge with Truth Social’s parent company TMTG, has recently unveiled previously undisclosed financial details of the social platform in its filing. Forbes and CNBC have reported that Truth Social lost $73 million since its launch approximately two years ago.
Net Sales for 2023 Only $2.3 Million
They further reported that according to the latest filing, “Truth Social lost $50 million in 2022, and another $23 million through the first six months of this year.” It recorded net sales of only $1.4 million in 2022 and $2.3 million in the initial half of 2023.
A Lack of Sufficient Funds
Furthermore, the filing states that if the planned merger between DWAC and TMTG is not completed, accountants have warned that “management has substantial doubt that TMTG will have sufficient funds to meet its liabilities as they fall due.”
Many Risk Factors, Including Possible Convictions
Market Watch has further reported that the outcome of Trump’s civil and criminal trials will significantly impact the company’s future. In their report, DWAC noted “multiple legal proceedings among roughly 80 pages of risk factors, and saying the company could be adversely affected if he is convicted or incarcerated.”
Capital Raised From Merger Could Save Truth Social
TMTG management has also stated that they believe capital raised from a merger with DWAC would be enough to cover any debt and to continue the media company’s operations.
Merger Must Be Completed by End of 2023
Management has also stated in the filing that sufficient funds would be “directly conditional” on closing the planned merger by the end of 2023 but also added that “additional funding” may be required.
Closing the Deal as Quickly as Possible
TMTG and DWAC filed financial documents to proceed with the merger. TMTG CEO Devin Nunes said, “We believe that today marks a monumental milestone toward completing the Business Combination, and we look forward to working with the SEC to bring this deal to a close as quickly as possible,”
The Centerpiece of a Movement
The CEO further stated, “Truth Social aims to be more than a social media platform. We aspire to become the centerpiece of a movement, as well as a method for Americans to invest in their freedom.”
Trump Has a Long History of Bankruptcy.
Trump’s companies have a long history of bankruptcy. Trump had a string of Casinos that all went bankrupt between 1991 and 2004, including Trump Hotels & Casino Resorts Inc., Trump Taj Mahal, and Trump Castle.
Investigations Have Stalled Plans for Merger
Trump’s merger of TMTG and DWAC has faced multiple delays due to several investigations. There have also been allegations of insider trading by investors.
Charges of Insider Trading
In June, The New York AP disclosed that three investors associated with Trump’s DWAC were facing charges for allegedly earning over $22 million through unlawful insider trading. This occurred prior to the public announcement of an acquisition firm’s intention to take Trump’s media company public.
Trump Made SPACs Great Again
In a recent report by InvestorPlace, the article explained that “Matthew Tuttle, a SPAC expert and the CEO of Tuttle Capital Management, once told InvestorPlace that Trump had ‘made SPACs great again.’
Now It’s Circling the Drain
Now, though, Matthew Tuttle, as reported by InvestorPlace, “speculates that TMTG ‘may be circling the drain.’ If that’s true, DWAC stock will likely follow close behind.”
A Good Reminder to Investors
A principal analyst at Renaissance Capital, Matthew Kennedy, said the “substantial doubt” comment is a “good reminder to investors that it’s a very real possibility that TMTG could shut down, given its operating losses and cash-on-hand.”
The DWAC “Investors” Will Be Left Holding the Bag.
One user went online and posted, “Trump said he’s “really rich” and doesn’t need to take it public. Let’s see if he puts his money where his mouth is. We all know he won’t, and even if he did, the DWAC “investors” will be left holding the bag.”
The ‘Stable Genius’ That Bankrupted Casinos
Another said, “Who could have seen this coming? The ‘stable genius’ that bankrupted casinos, of all things?!” Others called it fake news, with one user posting, “Yeah, like I’m going to trust some reporter from liberal ‘Hollywood.’”