With Donald Trump's re-election as president, the spotlight has turned to Trump Media & Technology Group and its social media platform, Truth Social. Despite the win, the company faces serious challenges, particularly around its financial viability and potential conflicts of interest for Trump as he embarks on his new term.
Truth Social has had mixed fortunes since its inception. While the market valuation of Trump Media has reached impressive heights, it still faces criticism due to its limited revenue streams and reliance on advertising, which has struggled to grow. For the first nine months of this year, Truth Social reported advertising revenues of only $2.6 million, down 23% from the previous year. The majority of this income came from merchandise and services targeting Trump supporters.
Adding another layer of complexity, Trump's overwhelming stake—approximately 57%—in the company raises ethical questions. Concerns have been raised about foreign entities potentially impacting the stock price by purchasing large quantities of shares, thereby influencing Trump's decisions and policies. According to Kathleen Clark, a government ethics expert, such scenarios could result in serious conflicts of interest.
Despite his significant ownership, Trump has stated he intends to hold onto his shares of Trump Media, reportedly considering it his primary means of communicating with supporters. His recent statements on Truth Social itself suggest he is wary of bearish investors trying to manipulate the stock’s price by spreading rumors about his intentions. Should his shares retain or increase their value, Trump has little incentive to divest.
On the corporate governance side, Trump's administration has already begun to weave itself deeply within the company. Several board members from Trump Media are being speculated upon for roles within his new administration. If they are appointed, the company would have to replace them, which could create instability. Shannon Devine, Trump Media's spokeswoman, emphasized their strides, proudly showcasing the company's endeavors to create what she called “an uncancellable, free-speech ecosystem.”
Critically, though, Truth Social's engagement metrics tell another story. Having just 650,000 active monthly users paled compared to its competitor X (formerly Twitter), which boasts over 70 million. The platform primarily sustains user engagement through Trump's personal posts, which suggest its viability hinges significantly on his involvement.
Reactions to the newly reformed administration reflect both optimism and skepticism. While many of Trump’s choices, particularly for key positions within his administration, signal continuity of his previous policies—many of which were received as controversial by the broader public and political analysts—others are hopeful about his focus on issues such as border control and economic policies benefiting the average American. For example, his nominees indicate a sharp pro-Israel stance and based on previous roles, may pave the path for radical changes in U.S. foreign policy.
Breaking with tradition, Trump has managed to sidestep the typical press conferences conventionally offered by past presidents. Political analysts point to this avoidance of media engagement, arguing it is not consistent with Trump's previous approach to interaction with the press. Trump previously criticized opponents for being inaccessible to journalists, but his administration's early days are showing significant reluctance to engage.
The transition team has only provided limited access to reporters, opting to release predetermined statements rather than hold comprehensive press conferences. This was seen during the announcement of his cabinet appointments. Trump's spokesperson insists he remains committed to engaging with the press regularly, but the current pattern raises eyebrows among political commentators.
Even within his own party, the re-election can stir discontent. Some Republican figures have voiced concerns about Trump's relationship with the media and the broader Republican agenda. Alabama Senator Tommy Tuberville recently expressed confusion at how Democratic candidates managed to secure more votes than Trump, hinting at potential election fraud. This sentiment echoes conspiracy theories and raises issues around the party's integrity.
From the business angle, Trump's corporate maneuvers raise questions about potential repercussions on the Republican Party. Executives have been cashing out their shares rapidly since the election, to the tune of $16 million, highlighting concerns about the financial health of Trump Media. The company’s CFO has initiated plans to sell up to 400,000 shares, potentially indicating skepticism about future stock performance.
Despite the setbacks, Trump's re-election could provide the media company with residual momentum. The stock, which had previously suffered, recently surged up to $29, more than 140% higher than its last low points. Investors are still optimistic, believing Trump's continued prominence can positively influence the market performance of Truth Social and Trump Media overall. Yet concerns about revenue, engagement, and ethical governance persist and may impede the long-term potential.
Trump's victory appears to validate his strategy for exerting influence through media outlets of his own making. Engaging directly with his supporters on platforms like Truth Social is emblematic of his broader media strategy, aiming to circumvent traditional media narratives. Of course, time will tell if this approach can sustain his endeavors as he seeks to navigate both corporate, ethical quagmires and the broader political landscapes of his forthcoming administration.
Trump Media’s future raises significant questions on multiple fronts. Will it be able to outgrow its current limitations and escape its reliance on the political identity tied to Trump? Or will it remain ensnared by the controversies surrounding its founder, yielding potential pitfalls as he takes the helm again? The next few months are likely to reveal much about both Trump's business maneuvers and his administration's approach to governance.
