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On Reddit and Truth Social, users have been trying to re-create the meme-stock magic for Trump Media and Technology Group—the company behind Truth Social—that boosted companies like GameStop in 2021. So far, they haven’t been too successful.
Truth Social, former president Donald Trump’s Twitter copycat, lacks two essential ingredients to the narrative of previous campaigns: underlying fundamentals and the foil of institutional investors. Large hedge funds had shorted GameStop, betting that the price would go down. This time, the stock is owned primarily by retail investors.
Unlike other social media companies, the Truth Social doesn’t disclose how many users it has, but has said previously that just 9 million people have signed up for the site, compared with over 3 billion monthly active users on Facebook. TruthSocial visitors have declined from 5.4 million in January to around 5 million in February, according to web analytics firm SimilarWeb. The site’s lack of users has contributed to poor financial performance.
On the r/wallstreetbets subreddit, home of meme-stock boosterism, most users aren’t buying what Truth Social is selling. “If you invest in this on a long enough timeline you will lose everything. Thus is strictly a movement play,” wrote Reddit user Rich4718. “If you think Donald Trump is going to create an income positive social media platform you are an absolute fucking moron.”
The company started trading publicly on March 26 under the ticker symbol DJT and has already experienced wild swings in price. On Monday, the stock slid nearly 20 percent, erasing $2 billion in value.
In a filing on Monday, the company said it had just over $4 million in revenue and $58 million in net losses. This comes after the auditor for Trump Media and Technology Group made a startling admission: The company’s losses “raise substantial doubt about its ability to continue,” according to a filing with the US Securities and Exchange Commission on March 25. And yet the company is valued at around $7 billion, despite reporting these sizable losses. The valuation is propped up in part by Trump fans who see investing in the company as a way to support the former president. In some cases, these investors hold a genuine belief that Truth Social could become a major social media player.
Albert Choi, a professor of Law at the University of Michigan, says investors in Trump Media may be motivated by factors beyond traditional financial logic, like boosting the price through generating hype.
“If that’s your primary motivating factor, then you’re not going to care too much about whether the company is actually making money,” says Choi.
“I believe DJT is an investment in Donald Trump, not just Truth Social,” Reddit user autsauce, who declined to share their real name, tells WIRED. “If market participants start asking that question, which I am betting they will, they will likely arrive at a very different price valuing Truth Social in a silo.”
Choi noted that Trump winning the Presidential election could actually hurt the company’s stock, as investors' perceived need to support the former president financially by investing could fade. “My guess is that the interest in the stock would largely disappear,” Choi said.
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Some Truth Social fans have spun the company’s entry into the public market as a fresh start. The infusion of capital from people buying shares in the company will enable Truth Social to post an improved financial performance, they argue.
“With $300M to properly grow a company and Trump’s impending win in 2024, the entire situation has changed,” Chad Nedohin, who regularly livestreams about his support for the company while wearing a Jack Sparrow costume, wrote on Truth Social.
Still, Truth Social doesn’t really provide anything unique. The company’s defining feature is that it's the website where Trump is currently posting, and it is, unsurprisingly, home to many posts discussing conspiracy theories about QAnon, stolen elections, and deep state plots.
But Devin Nunes, Truth Social CEO and former Republican US representative, said in an interview last week with the right-wing activist Charlie Kirk that the company plans to combine features from other social networks.
“We’re trying to take the best of all platforms and put it into one,” Nunes said, “whether it be Twitter, Instagram, TikTok, et cetera.”
Truth Social still needs to comply with Apple’s and Google’s terms of service to remain in its respective app stores. Nunes claims, however, that Truth Social “doesn’t use any of the woke companies, referencing Parler, the social media company that was kicked off Apple’s and Google’s mobile app stores in the wake of the January 6 riot at the Capitol. “It’s kind of an interesting investment, because you’re really investing in your constitutional rights,” Nunes said. “We’re the only company out there that can’t be shut down by woke companies.”
