Donald J. Trump has a long record of business failure and bankruptcy.
But after being kicked out of Twitter in 2021, he launched the social media site Truth Social.
Truth Social, his potential Twitter competitor, is a high-risk speculative venture with only a few hard numbers behind it. This has already become the subject of subpoenas, from regulators and a grand jury, although it has not yet been implemented. Oh, and even if Trump is re-elected president, he's not required to use the social media site much — if at all — to communicate with the public. You buy the stock at your own risk.
This is not me talking. This is… er… Truth Social's new stock market newsletter. It was just filed here with the US Securities and Exchange Commission.
In case you missed it, Donald Trump is trying to make a comeback on Wall Street.
He is in advanced talks to list Truth Social on the stock market by merging its parent company, Trump Media & Technology Group, with a publicly traded shell company, Digital World Acquisition Corp DWAC.
be seen: DWAC rises more than 15% as it moves to buy Trump Media & Technology Group — but there's a potential snag
Trump himself has mounting legal problems to deal with, as well as a presidential campaign. Meanwhile, Digital World itself has run into trouble with the Security and Exchange Commission, recently agreeing to pay $18 million to settle fraud charges related to that potential merger.
But regardless of all this: the stock price has suddenly risen, with Trump heading toward the Republican presidential nomination and a possible return to the White House. The stock price has tripled since the Iowa caucuses in January to $48, which could value the company at $6.5 billion.
But the deal prospectus, which runs to nearly 600 pages, is vague. It reveals all the reasons why investors jumping on the MAGA hype train might want to think twice, or even triple, to make the decision.
Investors warn that “a number of companies linked to President Trump have filed for bankruptcy.” “There can be no guarantees that TMTG will not go bankrupt as well… A number of companies that entered into licensing agreements with President Trump have failed. There can be no guarantees that TMTG will not fail either.
In case you forgot, “The Trump Taj Mahal, built and owned by President Trump, filed for Chapter 11 bankruptcy in 1991,” the letter states. “Trump Plaza Hotels, Trump Castle, and the Plaza Hotel, all owned by then-President Trump, filed for Chapter 11 bankruptcy in 1992.”
Trump Hotels & Resorts, founded by President Trump in 1995, went on to file for Chapter 11 bankruptcy in 2004. “Trump Entertainment Resorts, Inc., the new name given to Trump Hotels & Casino Resorts after its 2004 bankruptcy, has filed for bankruptcy In 2009.”
You know what gamblers say, that the house always wins? Here's your rebuttal.
Trump Hotels & Casino Resorts has had trouble with the law on its way down as well. The prospectus discloses that “on January 16, 2002, the SEC issued a cease and desist order against Trump Hotels & Casino Resorts, Inc. (“THCR”) for violations of the anti-fraud provisions of the Exchange Act.
I've written about Trump Hotels & Casino Resorts before. Ordinary investors, drawn to the stock by the appeal of the Trump name, ended up ditching their shirts, pants and shoes, and were left standing on the Atlantic City boardwalk in their underwear. Stockholders lost almost everything, even though Trump himself got millions.
be seen: Donald Trump has been a disaster in the stock market
See also: Donald Trump's trade debacle is worse than you think
“Trump Shuttle, launched by President Trump in 1989, defaulted on its loans in 1990 and ceased to exist by 1992,” the publication continues. “Trump University, which was founded by President Trump in 2005, ceased operations in 2011 amid lawsuits and investigations related to that company’s business practices.”
Let me remind you, this is not the fake news the liberal media talks about. It's a stock market bulletin for Trump's private business.
“Trump Vodka, a brand of vodka produced by Drinks Americas under license from the Trump Organization, was introduced in 2005 and discontinued in 2011.” Trump Mortgage, LLC, a financial services company founded by President Trump in 2006, ceased operations in 2007. GoTrump.com, a travel website founded by President Trump in 2006, also ceased operations in 2007. Trump Steaks, A brand of steaks and other meats founded by President Trump in 2007, it stopped selling two months after its launch. two months.
But the social reality would be different, wouldn't it?
There is also a long section listing all of the former president's current legal problems. You always know you're buying quality stock when you read the prospectus like a police blotter.
Then there is the “social truth” deal itself.
The prospectus stated that the Trump Technology and Media Group “aspires to build a media and technological force to compete with the liberal media union and promote freedom of expression.”
Total social subscriptions truth so far? Er… 8.9 million people.
In the nine months to September 2023, the company suffered an operating loss of $10.6 million on sales of just $3.4 million.
Meanwhile, it somehow accumulated $37.7 million in interest expenses.
If you want more financial details about Truth Social before investing, you're not alone. The board of Digital World, a potential merger partner, admits they, too, would like more financial details.
Unfortunately, Trump's actions “did not provide the Digital World Council with TMTG's financial projections in connection with the Digital World Council's due diligence process,” they reveal.
oh well. You can't have it all.
Some of this may be because the people running Truth Social – led by CEO Devin Nunes, a former member of the US House of Representatives – don't actually have very much data. “[I]Investors should be aware that since its inception, TMTG has not relied on any specific key performance measure to make business or operating decisions. “Therefore, internal controls and procedures were not maintained to collect this information on a regular basis, If yes“.my italics.
Trump's operation has taken place to choose Do not track these metrics. He states: “At this stage of its development, TMTG believes that adhering to traditional KPIs, such as subscriptions, average revenue per user, ad impressions and pricing, or active user accounts including monthly and daily active users, can shift its focus.” From strategic assessment regarding the progress and growth of its business.
They didn't want the numbers to distract them from work. He called this “alternative facts” school of business.
But the real point here is that although investors are buying this stock in hopes that Donald Trump will do for Truth Social what he did for Twitter, there's actually no guarantee that he'll use it much, or at all. Even if he is elected president.
That's because, as the prospectus reveals, Donald Trump's agreement with Truth Social is limited. Yes, he should post some of his social media messages there first. But only those “non-political” accounts, made from his “personal (i.e. non-commercial)” accounts. In fact, the social exclusivity on each post lasts for only six hours.
Trump can also cancel this agreement with 30 days' notice, “at any time on or after February 2, 2025.” In other words, shortly after the inauguration (if ever).
Even then, who will decide which social media posts are considered “political” and therefore exempt from the exclusivity agreement? Guess.
“President Trump…may post social media communications from his profile that he seesAt his sole discretion, Be politically relevant On any social networking site at any time“, warns the prospectus. My italics.
“As a presidential candidate, most or all of President Trump's social media posts may be considered politically relevant,” he adds.
As a result, investors are wary.You may lack any meaningful treatment If President Trump reduces his use of Truth Social.
Trump will own at least 58% of the new company's shares, giving him complete control, and minority investors will give him nothing but hope. What could go wrong?
