Truth Social: Trump’s Media Empire Bleeds Cash Despite Goldmine Potential

Donald Trump’s Truth Social has become a focal point in the media and financial landscape, particularly since his election victory in November 2024. Launched in 2022, the platform emerged from the aftermath of Trump’s ban from mainstream social networks. It has evolved into an essential tool for those tracking US policy, often serving as the medium for major policy announcements, akin to Trump’s use of Twitter during his first term. This article delves into Truth Social’s impact on financial markets, its business model, and the challenges and opportunities it faces.

The platform’s ties to the ‘MAGA’ movement present both strengths and liabilities. This dynamic influences its market relevance, financial performance, and strategic direction. How Truth Social navigates this complex terrain is vital for understanding its future viability and impact on the broader political and economic environment. We will explore how the platform’s valuation is not backed up by its revenue. Also, we’ll discuss how Donald Trump’s influence on Truth Social affects the platform and the stock market.

Truth Social as a Policy Announcement Platform

Truth Social’s significance extends beyond a typical social media platform; it serves as a direct line to the US President, influencing market behaviors and economic policies. Monitoring Trump’s ‘truths’ has become crucial for understanding immediate policy shifts. This direct access has led to significant fluctuations in financial markets, compelling investors and traders to closely monitor the platform for real-time policy updates.

Neil Wilson of Saxo Markets notes, ‘Now everyone in the markets is checking Truth Social. You simply cannot ignore what Trump is saying.’ The immediacy and directness of Trump’s communications mean that traders must stay informed to anticipate market movements, highlighting the platform’s unique role in shaping financial strategies and responses. The market is hooked on Trump’s comments – partly because they are always brash and bold, but also because they show policymaking in real time, not behind closed doors.

Market Analysts Adapt to Truth Social

In response to Truth Social’s influence, market analysts are adjusting their schedules and strategies to align with Trump’s activity on the platform. Kathleen Brooks at XTB mentions shifting work hours to coincide with US market hours, acknowledging that significant volatility often occurs during these times. Richard Holtum, CEO of Trafigura, even jokingly suggested shifting his Europe-based traders’ hours so that they begin work when Trump gets up.

This adaptation highlights Truth Social’s impact on trading practices, indicating a shift in how financial professionals gather and respond to information. The need to monitor the platform underscores its role as a primary source of market-moving news and insights. The market is hooked on Trump’s comments partly because they are always brash and bold, and also because they show policymaking in real time, not behind closed doors.

Truth Social’s Reach and Growth

While Truth Social is growing, it remains smaller than platforms like X and Meta’s Threads. As of March, Truth Social recorded 30.5 million monthly visits, compared to the billions on other major platforms. However, its growth is significant. Traffic has increased by 61% since the start of the year. Traffic was up 61pc from 18.5m at the start of the year and up from 5m a year ago.

This growth reflects increasing relevance in the social media landscape, driven by its association with Trump. Ben Seager-Scott from Forvis Mazars points out that advanced firms are developing algorithms to scrape data from Truth Social, mirroring practices used for platforms like X and Reddit. More advanced firms like hedge funds are already using algorithms to scrape things like X and Reddit, they will be turning those systems, no doubt boosted by AI technology, to Truth Social and Bluesky.

Financial Performance and Challenges

Despite its increasing relevance, Truth Social faces financial challenges. TMTG’s revenues were $3.6 million last year, a 12% decrease from the previous year. The company reported a loss before tax from operations of $400.9 million. Additionally, TMTG is involved in legal disputes with shareholders and early employees. TMTG has also suffered from volatility because its lofty valuation is not backed up by underlying performance. Revenues, chiefly from digital advertising, were $3.6m last year and fell by 12pc compared with a year earlier.

Impact of Elon Musk’s X

Matthew Tuttle from Tuttle Capital Management suggests that Elon Musk’s acquisition of X has presented challenges for Truth Social. Many right-wing users, who Truth Social hoped to attract, find a natural home on X. Also, content from Truth Social is often quickly shared on X, diminishing its unique influence. ‘I don’t think social media is a viable strategy now that Elon owns X,’ Tuttle says. ‘I do think crypto and ETFs [exchange-traded funds] could be huge if they can execute and market to Trump supporters.’

Future Strategies and Revenue Streams

To diversify revenue streams, TMTG is exploring financial products and cryptocurrencies, with plans to launch investment accounts, funds, and cryptocurrency services under the Truth.Fi brand. Also, brands are seeking to curry favor with the president. Major advertisers are reported to include Based Apparel, a pro-Maga clothing brand. Other adverts seen by The Telegraph include free IQ tests, workout plans and, bizarrely given Mr Trump’s trade war, promotions for Chinese e-commerce app Temu. It’s also possible that advertising could boost Truth Social, as brands seek to curry favour with the president.

The company hopes to tap into the ‘patriot economy,’ marketing these investment products to Trump’s followers. These initiatives represent efforts to leverage its brand recognition. Last week, it reached a deal with cryptocurrency giant Crypto.com to launch what it called “Made in America” crypto-linked funds, which Nunes said represented a “major step forward in diversifying” the business. The company hopes to make money by marketing these investment products to Trump’s followers.

Conclusion

Truth Social’s future is closely tied to the MAGA revolution, with its relevance driven by its association with Donald Trump. This connection presents both strengths, offering direct access to the president’s communications, and liabilities, potentially diminishing its brand should Trump’s popularity decline. The company’s future is closely tied to the success or otherwise of Trump’s Maga revolution. It is the association with the president that sets Truth Social apart and gives it relevance.

Despite financial challenges, TMTG’s substantial cash reserves from its stock market listing provide valuable time to develop a viable business model. Truth Social’s ability to innovate revenue streams, manage its brand reputation, and adapt to the changing social media landscape will be crucial in determining its long-term success and impact on financial markets and political discourse.