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In reddit and Truth Social, users have been trying to recreate the magic of the meme for Trump’s media and technology groupthe company behind Truth Social, which boosted companies like Gamestop in 2021. So far, they haven’t had much success.
Social Truth, a Twitter impersonator of former President Donald Trump, lacks two essential ingredients in the narrative of previous campaigns: the underlying fundamentals and the contrast of institutional investors. The big hedge funds had shorted game stop, betting that the price would drop. This time, the shares are mainly owned by retail investors.
Unlike other social media companies, the company does not reveal how many users it has, but has previously said that only 9 million people have registered on the site, compared to more than three thousand millions Monthly active users on Facebook. TruthSocial visitors have dropped from 5.4 million in January to about 5 million in February, according to web analytics firm SimilarWeb. The lack of users of the site has contributed to the poor financial performance.
On the Wallstreetbets subreddit, home of meme stock momentum, most users don’t buy what Truth Social is selling.
“If you invest in this long enough, you will lose everything. Therefore, it is strictly a work of movement.” wrote Reddit user Rich4718. “If you think Donald Trump is going to create a revenue-positive social media platform, you’re a complete moron.”
The company went public last week and has already seen big price swings. On Monday, shares fell nearly 20 percent, erasing $2 billion in value.
In a filing Monday, the company said it had just over $4 million in revenue and $58 million in net losses. This comes after Trump Media and Technology Group’s auditor made a surprising admission: the company’s losses “raise substantial doubts about its ability to continue.” according to a filing with the Securities and Exchange Commission on March 25.
And yet the company is valued at around $7 billion, despite reporting these considerable losses. The valuation is supported in part by Trump fans who see investing in the company as a way to support the former president. In some cases, these investors genuinely believe that Truth Social could become a major player in social media.
Albert Choi, a law professor at the University of Michigan, says investors in Trump Media may be motivated by factors beyond traditional financial logic, such as increasing the price by generating publicity.
“If that’s your main motivating factor, then you won’t care too much whether the company is actually making money,” Choi says.
“I think DJT is an investment in Donald Trump, not just Truth Social,” Reddit user autsauce, who declined to share his real name, tells WIRED. “If market participants start asking that question, which I bet they will, they will probably arrive at a very different price by valuing Truth Social in a silo.”
Choi noted that Trump’s victory in the presidential election could actually hurt the company’s stock, as investors’ perceived need to financially support the former president through investments could fade.
“My guess is that interest in stocks would largely disappear,” Choi said.
