(News Bulletin 247) – The stock price of Trump Media Technology, the company that oversees the social network Truth Social, has been divided by almost three since its peak shortly after its arrival on Wall Street. The company has poor accounts and has hardly been helped by Donald Trump’s return to X.

As Donald Trump now locks horns with Kamala Harris ahead of the November 5 US presidential election, his media company is suffering on Wall Street.

Trump Media Technology Group (TMTG), which oversees the businessman’s social network “Truth Social”, had nevertheless entered the American stock market with great fanfare on March 26, via its merger with a SPAC, a listed investment vehicle without operational activities that facilitates the processes for IPOs. The stock had gained 16% then 14% the following session.

But very quickly, reality caught up with the stock. TMTG notably fell by more than 20% in early April, after several media outlets cited documents filed with the SEC (Securities and Exchange Commission), the American stock market watchdog, which reported deleterious financial accounts. According to these same documents, the audit firm responsible for certifying the company’s accounts stressed that TMTG’s financial situation raised “significant doubts as to the continuation of its activity”.

>> Access our exclusive graphic analyses, and enter the Trading Portfolio’s confidence

Losses that represent 200 times the turnover

The latest results published by TMTG, on August 9, attest to the extreme fragility of its finances. Over the first six months of 2024, the company had generated only $1.6 million in revenue for a net loss of… $344 million.

John Rekenthaler, an analyst at Morningstar, pointed out in April that “everyone understood” that the company did not have “a significant business outlook” and therefore that investors betting on TMTG were buying the stock more for their “much more personal connection to Trump.” In other words, their political proximity to the Republican candidate for the White House.

Interesting point: TMTG, in the document compiling its results and filed with the SEC, listed several risks. Among these, the group recalled the risks associated with the reputation of Donald Trump.

“Additionally, TMTG’s business plan relies on President Donald J. Trump bringing his former social media followers to TMTG’s platform,” the company also wrote.

A valuation disconnected from the fundamentals

Donald Trump, who owns more than 57% of the company, hasn’t exactly helped on this front. Last week, the businessman gave an exclusive interview to Elon Musk on X (formerly Twitter), a social network that essentially competes with “Truth Social.” This came a day after he returned to X after a year of absence.

As Bloomberg points out, this appearance on X was “the latest headwind” that his own social network had to endure. “One of the arguments investors had for buying Trump Media was that if he won in November, he would use his Truth Social platform as a megaphone from the White House,” the agency points out.

The stock lost another 5% on the day of the interview with Elon Musk. Subsequently, Donald Trump said on Monday that he was considering giving the Tesla boss a position in his administration. In other words, he would collaborate with the owner of one of the biggest competitors of his own social network. TMTG lost further ground on the stock market.

Since its record closing price reached on March 27 ($66.22), the stock has been divided by almost 3

in the space of a few months.

The fact remains that TMTG’s stock market valuation, around $4.2 billion, still appears disconnected from its fundamentals. Bloomberg also had fun calculating that this valuation represents more than 1,400 times the company’s annual revenues. Nvidia, Wall Street’s darling stock, is at… 40.