Did you short the Trump Media and Technology Group stock when it hit the open market last week? Congrats, we hope you were busy selling the shit out of it on Monday when it was losing as much as 25 percent of its value. (It closed down 21.47 percent, with after-hours trading trending also badly as of this writing.)
Wha’ happen? Well, the company had a regulatory filing due to the SEC, and in it Trump Media reported total losses of $58.5 million in 2023, with total revenue of a whopping $4.5 million. Which makes it about as valuable as a three-store Pizza Hut franchise in Bumblefuck, Idaho, according to our admittedly haphazard calculations. The company’s total revenue just in the fourth quarter was a little over $750k, which was a 39 percent year-over-year drop from the fourth quarter of 2022.
And it doesn’t sound like it’s going to get better. The company says it expects operating losses and negative cash flow for the foreseeable future. But somehow the company has a market cap of $6.5 billion. How this sucker is not yet a penny stock is beyond us.
Meanwhile, the SEC filings are a hoot. (Trigger warning for extremely tiny print.)
For one thing, did you know that Truth Social doesn’t collect basic social media data like how many frickin’ active users it has? (That’s presumably to spare Trump’s feelings over the incredibly tiny number.) Or that its own accounting firm already has “substantial doubt about its ability to continue as a going concern?”
And this is all before we get to the fact that TMTG is banking on the heartbeat of a 77-year-old dementia quiz champion who is running for president of the United States, doesn’t exercise, has a circulatory system that at this point we think is mostly cheeseburgers, and is facing hundreds of billions of dollars in civil fines plus dozens of felony charges in multiple federal and state courts. As it noted in its original prospectus:
The death, incarceration, or incapacity of President Trump, or discontinuation or limitation of his relationship with TMTG, may negatively impact TMTG’s business.
Trump’s going to hit one of those three sooner or later, and likely sooner.
And yet:
That long-delayed deal was completed last week, paving the way for Trump Media to receive an influx of approximately $300 million in cash. The company can now use those funds to pay down debt and, importantly, build out its infrastructure.
“I believe the $300 million of cash should remove this ‘going concern’ risk,” said Matthew Kennedy, senior IPO strategist at Renaissance Capital.
Sure, no company has ever blown through $300 million in financing and then gone tits up. Especially not one with the name Trump attached to it.
On the plus side, the latest SEC filing seems to indicate that the company’s board is keeping the lock-up provision that prevents Trump from dumping all his stock for six months.
So in short, you have a ridiculously overvalued stock with a company that brought in less revenue than your average Kohl’s last year, and its future viability depends on the continued freedom and good health of Donald Trump.
Good luck, folks.
OPEN THREAD.
[CNN]
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