New York – Investors in Trump Media & Technology Group’s stock are facing significant losses as shares of TMTG (DJT) plummeted 14% on Tuesday following an 18% drop the previous day. The decline was triggered by the announcement of a major expansion into streaming by the company’s flagship product, Truth Social, a move that raised concerns due to the costly nature of the streaming business where profitability is a challenge for many media giants.
Majority-owned by former President Donald Trump, TMTG has seen its stock value fall over 70% from its all-time high set just days after going public through a merger with a blank-check acquisition company. Despite still being valued in billions of dollars, the company is struggling financially and has resorted to selling additional shares to raise cash, a move that may dilute the value for existing shareholders.
In 2023, Trump Media reported a loss of $58 million while generating only $4.1 million in revenue. The decision to sell more shares to the public comes as a means to boost cash reserves, even though it may impact the value for current stockholders negatively.
The company’s recent push into streaming failed to generate enthusiasm among investors as Truth Social revealed plans to offer live news, religious programming, and family-friendly content that may have faced censorship or cancellation on other platforms. CEO Devin Nunes emphasized the platform’s aim to provide a safe space for content creators who have been marginalized elsewhere.
Comparisons have been drawn between Truth Social’s initiative and Elon Musk’s streaming platform, X, which boasts a much larger audience but has struggled with attracting advertisers due to controversies over hate speech and conspiracy theories.
The association with former President Trump appears to be the primary driver behind the inflated valuation of TMTG, turning it into what is known as a “meme stock” that relies more on emotional responses than financial fundamentals. Trump has seen a significant dip in his net worth following the stock’s plunge, shedding hundreds of millions of dollars in just one day.