When Truth Social launched in 2022, backers of the social network described it as a conservative-friendly 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, has booked just $2.3 million in sales through June of this year, while losing 10 times that amount.
The disclosure also includes a warning from Trump Media & Technology Group’s auditors, who said they have “substantial doubt about the company’s ability to continue as a going concern.”
The financial details of the Trump Media & Technology Group were released on Monday archiving 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 stock to the public more quickly than in a traditional IPO, which requires more regulatory steps.
The filing marks “a critical milestone in our journey toward the potential merger with TMTG,” DWAC CEO Eric Swider said said in a statement on Monday.
The cautionary language from Trump Media’s auditors is known as a “going concern” warning, which indicates that an accounting firm believes a company may not have sufficient cash on hand to pay its debts and may default within the next year. according to to S&P Global.
To be sure, the warning reflects only a snapshot in time, and it’s possible that Trump Media’s pending deal with DWAC could provide the funding the merged company needs to meet its obligations and help drive growth.
Trump, who chairs Trump Media and owns a stake in the company, has agreed to post on Truth Social ahead of any other competing social media service, the filing noted.
Trump Media did not immediately return a request for comment.
Burning through cash
The financial picture emerging from the filing depicts a company facing mounting losses in the face of growing but modest sales. Trump Media reported revenue of $2.3 million for the first six months of 2023, compared with no revenue in the same period a year earlier, the filing noted.
With its losses mounting, Trump Media is also burning through cash, ending June with $2.4 million in cash, down from $19 million a year earlier, according to filings. The company reported an operating loss of $23.3 million in 2022, although it recorded a net profit of $50.5 million after a change in value related to its convertible notes.
Trump Media is negotiating its debt with lenders, and the filing includes a warning that its own management is concerned about its ability to pay for the company’s obligations 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 obligations as they fall due, including obligations related to debentures previously issued by the company,” it said in the case.