Truth Social stock hits new low as Donald Trump seeks to expand audience

Donald Trump's Truth Social site once offered a unique appeal: exclusive content from the 45th president himself. That perk is now gone.

To boost his campaign, Trump returned to Twitter, now rebranded as X, to reconnect with voters on the platform that helped him win the presidency.

The move raises questions about the future of Trump Media and Technology Group (TMTG), the financially troubled parent company.

TMTG's viability has been closely tied to Trump's political profile and his initials, DJT, which also serve as his stock symbol.

With the loss of exclusive content, Truth Social risks becoming irrelevant in a crowded digital media market.

On Monday, TMTG shares hit a new all-time low, closing down 3.6% to $22.24 since its SPAC merger in March.

The drop comes ahead of the end of a six-month lockup period in late September, during which Trump could potentially sell his 79 million shares, representing 60% of the outstanding shares.

Fortune was unable to reach TMTG for comment.

Why is Trump back on X?

The decision to return to Twitter/X comes at a critical time, as the 78-year-old loses momentum to his younger opponent Kamala Harris.

With a tight race and a field campaign he has outsourced to donors to save costs, he appears increasingly worried.

Are you in a better situation today than when I was president?

Our economy is in ruins. Our border has been erased. We are a nation in decline.

Make the American Dream AFFORDABLE again. Make America SAFE again. Make America GREAT again!

Donald J. Trump (@realDonaldTrump) August 12, 2024

Previously, Trump had returned to X only to post his mugshot after owner Elon Musk reversed the ban imposed by the former Twitter after Trump incited the violent January 6 Capitol riots.

Even after surviving an assassination attempt, he did not return to publish the image of himself surrounded by secret service agents, blood streaming down his face and his fist raised in the air.

But that was when pollsters were predicting he would win.

Trump can no longer afford to limit his influence to Truth Social, a company that refuses to disclose its own user numbers or the number of likely fake accounts run by bot farms.

In June, Trump joined ByteDance's TikTok, a controversial move given its contentious relationship with China, where its parent company is based.

But TikTok is a video-sharing platform, an area he knows less about.

His presence there is sporadic, his subscriber count is a fraction of X's, and his audience has plummeted due to a lack of fresh, engaging content.

On August 12, he marked his return to X ahead of a two-hour chat with Musk and has been posting regularly since.

TMTG's Loss-Inducing Business is Getting Worse, Not Better

Truth Social's future remains uncertain, as its financial outlook was already bleak when Trump was using the platform exclusively.

Parent company TMTG continues to be a financial burden. Its daily operating costs for R&D, personnel and overheads are 73 times its revenue. Excluding non-cash impairment of $226 million, TMTG posted a six-month net loss of $118 million on revenue of $1.6 million.

The situation is deteriorating: TMTG's operating loss for the first half of the year increased 15-fold compared to last year, and revenues fell by 30%, from $2.3 million.

TMTG acknowledges that its finances are poor, but says its management is focused on improving features and user experience rather than key performance indicators. The company does not track or factor average revenue per user, ad impressions, pricing, or active user accounts into its business decisions.

TMTG may decide to collect and report such measures if they are deemed to materially enhance investors' understanding of TMTG's financial condition, cash flows and other aspects of its financial performance, it said in its 10-Q filing earlier this month.

Finally, his independent accounting firm, BF Borgers, based in Colorado, was hit with a lifetime ban for copying and pasting audits and falsifying dates. The SEC found that he committed massive fraud in more than 1,500 regulatory filings over a two-and-a-half-year period through June 2023.

Barry Diller, chairman of media group IAC, didn't mince words about the startup in early April: “It's a scam. Like everything he's been involved in.”

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