When Truth Social launched in 2022, supporters of the social network described it as a conservative alternative to Big Tech platforms that would attract advertisers eager to court former President Donald Trump’s millions of followers. But a new regulatory filing reveals that Truth Social’s owner, Trump Media & Technology Group, recorded just $2.3 million in sales through June of this year, while losing 10 times that amount.
The disclosure also contains a warning from Trump Media & Technology Group’s accountants, who said they had “substantial doubts about the company’s ability to continue as a going concern.”
Financial details of the Trump Media & Technology Group were made public Monday. deposit from Digital World Acquisition Corp. (DWAC), a so-called special purpose acquisition company, or SPAC, with Trump’s business. SPACs allow a company to sell shares to the public more quickly than in a traditional IPO, which requires more regulatory steps.
The filing marks “a critical step in our journey toward a potential merger with TMTG,” said Eric Swider, CEO of DWAC. said in a press release Monday.
The warning from Trump Media accountants is known as a “going concern” warning, which indicates that an accounting firm believes a company may not have enough cash to pay its debts and could default over the next year. according to at S&P Global.
To be sure, the warning only reflects a snapshot in time, and it’s possible that the pending deal between Trump Media and DWAC will provide the financing the combined company needs to meet its obligations and help spur growth.
Trump, who is president of Trump Media and has an ownership stake in the company, agreed to post on Truth Social before any other competing social media service, the filing said.
Trump Media did not immediately respond to a request for comment.
The financial picture that emerges from the filing depicts a company facing mounting losses in the face of growing but meager sales. Trump Media reported revenue of $2.3 million for the first six months of 2023, compared to no revenue for the prior-year period, the filing said.
With its losses mounting, Trump Media is also burning through cash, ending June with $2.4 million in cash, up from $19 million a year earlier, according to the filing. The company reported an operating loss of $23.3 million in 2022, although it reported a net profit of $50.5 million after a change in value related to its convertible notes.
Trump Media is negotiating its debts with lenders, and the filing includes a warning that its own management is concerned about its ability to pay the company’s debts and meet its obligations to lenders.
“During the 12 months following the signing of these financial statements, management has substantial doubt that the Company will have sufficient funds to meet its debts as they become due, including debts relating to promissory notes previously issued by the company,” the filing states.