How Truth Social Makes Money For Former President Trump

Summary

Truth Social, launched by Donald Trump in 2022, is a social media platform aiming to counter liberal media and big tech. Despite its low revenue and user base compared to giants like Twitter and Facebook, it has attracted a passionate user base and significant investment, largely driven by Trump's influence. The platform's future hinges on its ability to expand beyond its political focus and generate sustainable revenue.

Takeaways

• 📱 Truth Social is a social media platform launched by Donald Trump and his business partners, aiming to counteract what they see as Big Tech's suppression of free speech.
• 🔥 The platform's user base primarily consists of passionate supporters of Donald Trump, indicating a strong political inclination towards conservatism.
• 💼 Some view Truth Social as a vanity project for Trump, rather than a rational business endeavor.
• 💰 Despite initial struggles to turn a profit, the platform has the potential to make Trump a significant amount of money, especially for early investors who bought shares at the IPO price.
• 📈 The company's stock has experienced rallies, partly driven by Trump's use of the platform to break news, which can influence share prices.
• 🆚 Truth Social is structured similarly to Twitter, with features like 'truths' instead of tweets and 'ReTruths' instead of retweets.
• 💬 The platform's main revenue source is advertising sales, but it has not disclosed key performance indicators like daily active users.
• 📊 Analytics firm SimilarWeb estimates Truth Social received significantly fewer visits compared to Twitter and Facebook, highlighting a smaller user base.
• 📉 In comparison to Meta's $35.6 billion in Q1 2024 ad revenue, Truth Social earned only $770,000, indicating a substantial revenue gap.
• 🤝 Truth Social emphasizes free speech and creator control of content, positioning itself as an alternative to perceived liberal bias on other platforms.
• 🏢 Trump Media and Technology Group, the company behind Truth Social, sees itself as a rival to the 'liberal media consortium' and trades on the Nasdaq under the ticker DJT.
• 📉 The company's market capitalization is high despite low revenue, leading to分析师 confusion about its valuation, with some suggesting it's driven more by the 'meme stock' phenomenon than fundamentals.
• 📈 Trump's large ownership stake in the company has significantly increased in value, raising questions about his intentions for the platform and potential conflicts of interest.
• 📉 The company faces potential failure if it cannot generate sufficient users and advertisers, and ongoing lawsuits could impact its financial stability.
• 🗳️ Truth Social could influence the 2024 election by bolstering Trump's finances and support among his base, solidifying his political influence.
• 🚫 Trump's exclusive contract with Truth Social may limit his reach compared to his former Twitter following, indicating a trade-off between exclusivity and audience size.
• 🏛️ The platform's creation was a response to Trump's banning from major social media platforms following the January 6th Capitol riot, highlighting its origins as a counter to perceived censorship.

Q & A

What is Truth Social and who is it majority owned by?

Truth Social is a social media platform that is majority owned by former President Donald Trump and his business partners. It was launched as an alternative to mainstream platforms like Twitter and Facebook, aiming to provide a platform that supports free speech and is more aligned with conservative values.

What is the primary motivation behind the creation of Truth Social according to the investors?

The investors behind Truth Social aim to counter what they perceive as Big Tech's assault on free speech. They see the platform as a way to provide an alternative to liberal platforms and protect conservative voices.

What is the general sentiment towards Truth Social among its users?

The users of Truth Social tend to be passionate supporters of Donald Trump. They are drawn to the platform as a place where they can express their views without the perceived censorship of mainstream social media.

How has the financial performance of Truth Social been since its launch?

Despite its initial buzz, Truth Social has struggled to make a profit. It has not turned a profit yet, but some investors have seen significant returns on their investments, with some having tripled their money.

What is the main source of revenue for Truth Social?

The main and only source of revenue for Truth Social comes from advertising sales. Unlike other social media platforms, it does not monetize user data.

How does Truth Social compare to other social media platforms in terms of user engagement?

Truth Social has significantly lower user engagement compared to platforms like Twitter and Facebook. For example, in June 2024, TruthSocial.com received 5.3 million total visits, compared to about 7.3 billion for Twitter and 15.3 billion for Facebook.

What is the role of Donald Trump in attracting investors to Truth Social?

Donald Trump is a significant draw for retail investors. His presence and activities on the platform, such as breaking news and commenting on current events, can influence stock prices and attract more investors.

What challenges does Truth Social face in terms of user base expansion?

Truth Social primarily appeals to a politically conservative audience, which limits its potential user base. This focus on politics makes it difficult for the platform to attract a broad cross-section of users, which is essential for successful social media platforms.

How did the formation of Trump Media and Technology Group impact Truth Social?

Trump Media and Technology Group is the result of a SPAC merger that completed in late March. This merger made Truth Social a public company, trading on the Nasdaq under the banner DJT, which are Trump's initials. This has significantly increased its visibility and market capitalization.

What are the potential implications of Truth Social for the 2024 election?

Truth Social could potentially influence the 2024 election by bolstering the former president's finances and stirring up support among his base. It serves as a platform for right-leaning politicians to reinforce their beliefs and solidify their support.

What are the legal and financial challenges that Donald Trump faces that could impact Truth Social?

Donald Trump faces pending lawsuits that could result in significant financial liabilities. If he is able to cash out some of his stake in Trump Media, he could potentially use those funds to cover his legal fees, which could affect the stability and future of Truth Social.

Outlines

00:00

📱 Launch and Struggles of Truth Social

Truth Social is a social media platform launched by former President Donald Trump and his partners as an alternative to mainstream platforms perceived as biased against conservatives. Aimed at passionate Trump supporters, it has been criticized as a vanity project and is not yet profitable. Despite this, the platform has seen its stock prices soar, with retail investors attracted by Trump's involvement. The platform mimics features of Twitter but with terms like 'Truths' instead of 'Tweets' and 'ReTruths' instead of 'Retweets'. Its revenue comes solely from advertising, and while it has declined to verify user data, analytics estimate significantly lower visits compared to Twitter and Facebook. The platform's focus on politics may limit its user base, and its parent company, Trump Media and Technology Group, positions itself as a rival to liberal media giants despite its current revenue struggles.

05:04

💹 Market Capitalization and Investor Behavior

The market capitalization of Truth Social's parent company, Trump Media, is puzzling to analysts given its modest revenue and significant net loss. With over 600,000 retail investors, the company's stock is seen more as an act of faith in Trump rather than a sound investment based on ad revenue projections. Trump's substantial ownership stake has already made him a lot of money, raising questions about his intentions for the company's future. The company's reliance on ad revenue and user data is challenged by its small size and ongoing lawsuits, with some suggesting market manipulation by a few firms. The potential for Trump to bolster his finances and political support through the platform is noted, although his financial liabilities from lawsuits and the timing of his ability to sell his shares could impact the company's trajectory.

10:08

🗣️ Trump's Dominance and the Future of Truth Social

Donald Trump is the most followed individual on Truth Social, using the platform to engage with his base and respond to political events. His presence is a major draw for users, distinguishing the platform from other conservative-leaning social media sites. However, Trump's exclusive contract with Truth Social may limit his reach compared to his former Twitter following. The platform's growth and future are closely tied to Trump's activities and influence, and its potential impact on the 2024 election is a subject of speculation. The platform's user base growth in the US is a concern, and the financial implications for early investors could be significant if the stock price falls below the initial IPO price.

Keywords

💡Truth Social

Truth Social is a social media platform launched by former President Donald Trump and his business partners. It was created as an alternative to mainstream platforms like Twitter and Facebook, which are perceived by some as biased against conservative voices. The platform is structured similarly to Twitter, with features like 'truths' instead of tweets and 'ReTruths' instead of retweets. It is primarily funded through advertising sales and has been a subject of interest for retail investors, partly due to Trump's influence.

💡Big Tech

Big Tech refers to the largest technology companies in the world, often including companies like Google, Facebook, Twitter, and Amazon. In the context of the video, the term is used to describe the perceived dominance and influence of these companies, particularly in controlling speech and information on their platforms. The video suggests that Truth Social was created in response to what some see as an 'assault on free speech' by these companies.

💡IPO (Initial Public Offering)

An Initial Public Offering is the first sale of stock by a company to the public. In the script, it is mentioned that Truth Social's parent company, Trump Media and Technology Group, went public with an IPO price of $10 per share. This event marked a significant milestone for the company, allowing it to raise capital and become accessible to retail investors.

💡Retail Investors

Retail investors are individual investors who buy and sell securities for their personal accounts, as opposed to institutional investors like banks or mutual funds. The video highlights that retail investors have been drawn to Truth Social's stock, potentially due to their support for Donald Trump and the platform's promise of free speech, rather than strictly financial considerations.

💡Market Capitalization

Market capitalization is the total value of a company's outstanding shares of stock. It is calculated by multiplying a company's shares outstanding by the current market price of one share. The video discusses the high market capitalization of Trump Media and Technology Group, despite its limited revenue, which some analysts find baffling.

💡Advertising Revenue

Advertising revenue is the income generated from advertising on a platform or website. For Truth Social, advertising is its only source of revenue, as mentioned in the video. The platform's ability to generate significant advertising revenue is crucial for its financial sustainability, but it faces challenges in this area due to its smaller user base compared to established platforms like Facebook.

💡Meme Stock

A meme stock refers to a stock that gains popularity and experiences a rapid increase in price due to social media hype, often driven by retail investors rather than traditional financial analysis. The video suggests that the stock price of Truth Social may be influenced by its status as a 'meme stock,' driven by retail investors' enthusiasm rather than the company's financial performance.

💡Spac (Special Purpose Acquisition Company)

A Special Purpose Acquisition Company is a company with no commercial operations and is formed strictly for the purpose of raising capital through an initial public offering (IPO) for the acquisition of an existing company. The video explains that Trump Media and Technology Group was formed through a Spac merger, which allowed it to go public and raise funds.

💡Key Performance Indicators (KPIs)

Key Performance Indicators are metrics used to measure a company's performance against its strategic objectives. In the context of social media, KPIs often include metrics like daily active users. The video notes that Truth Social has not been transparent with its KPIs, which is unusual and raises questions about the platform's actual user engagement.

💡Liberal Media

The term 'liberal media' is often used to describe media outlets that are perceived to have a left-leaning or progressive bias. In the video, Truth Social positions itself as an alternative to what it calls the 'liberal media consortium,' which includes major tech companies like Meta, Netflix, Alphabet, and Amazon, suggesting a desire to counterbalance perceived liberal bias in mainstream media.

💡Donald Trump

Donald Trump, the former President of the United States, is a central figure in the video. He is the majority owner of Truth Social and has used the platform to communicate directly with his supporters. His presence and influence are significant drivers of interest in the platform, both for users and investors.

Highlights

Truth Social is a social media platform majority owned by former President Donald Trump, aimed at ending Big Tech's control over free speech.

The platform is popular among passionate Donald Trump supporters and is viewed by some as a vanity project.

Despite initial struggles, Truth Social has the potential to make the former president a significant amount of money.

Investors who held shares since the $10 IPO price have roughly tripled their money.

Truth Social is not currently profitable, but retail investors are drawn to it due to Trump's involvement.

The platform's structure is similar to Twitter, with 'Truths' and 'ReTruths' instead of tweets and retweets.

Truth Social was launched as an alternative to liberal platforms, with a conservative focus.

The platform's revenue comes solely from advertising sales, unlike traditional social media which also profit from user data.

Truth Social's user base and revenue are significantly smaller compared to platforms like Twitter and Facebook.

The platform has been described as having a conservative bent, positioning itself against big tech and liberal ideology.

Trump Media and Technology Group, the company behind Truth Social, is valued at billions despite limited revenue.

The company's high market capitalization is puzzling to analysts given its current revenue and fundamentals.

Over 600,000 retail investors are currently involved with the stock, indicating strong public interest.

Donald Trump owns about 65% of the company, a stake worth billions based on the current valuation.

There are concerns about the company's ability to meet its promises of user and advertiser growth.

Trump Media's CEO has suggested that certain firms may be artificially suppressing the stock price.

Truth Social could influence the 2024 election by bolstering Trump's finances and support among his base.

Donald Trump could potentially use proceeds from his stake in Trump Media to offset legal fees from pending lawsuits.

The platform's growth and user engagement are closely tied to Donald Trump's activity and influence.

Truth Social's creation was a response to Trump's ban from major social media platforms following the Capitol riot.

Transcripts

Truth Social is a social media platform majority owned by former President Donald Trump and his business

partners. These investors say they want to end Big Tech's assault on free speech.

The type of person to trade X, now Twitter or Facebook for

Truth Social tended to be very passionate Donald Trump supporters.

I don't think that Truth Social was ever a rational endeavor.

I see it as a vanity project.

After a buzzy launch, the project has the potential to make the former president a lot of money, despite its

struggle to make a profit.

There's anybody out there that has held since the $10 IPO price, they've roughly tripled their money.

It's certainly not turning a profit right now.

A lot of analysts say that it is Trump who is the big draw for these retail

investors.

This has all the ingredients of a good old fashioned meme.

Stock rally.

Share prices for the company can move when the former president breaks big news on Truth Social.

Mr. Trump used the platform to confirm that a bullet grazed his right ear in a failed assassination attempt,

and to comment on President Biden dropping his 2024 presidential campaign.

So what is Truth Social and how much money can it make?

A team led by Donald Trump launched Truth Social in the first quarter of 2022, after the former president

was permanently banned from Twitter.

Truth social itself is structured very similarly to X, formerly Twitter.

So where X, formerly Twitter may have a tweet.

Truth social calls those truths where X formerly Twitter may have a retweet.

Truth Social calls those ReTruths.

Generally they have the same sort of timeline setup.

The idea of Truth Social to begin with was to bring an alternative to liberal platforms.

It has a conservative bent.

It was framed from the start around being sort of this bulwark against big tech and woke ideology and

liberal media and all the rest of that.

And its main revenue, its only revenue, in fact, comes from advertising sales.

Truth Social declined to verify its usage data with CNBC and described outside estimates as

fake.

Normally, social media companies post KPIs, key performance indicators.

They show how many daily active users they have.

Trump Media is not posting any of that information right now.

The analytics firm SimilarWeb estimates that True Social.com received 5.3 million total visits

in June 2024.

Compare that to about 7.3 billion for X.com, formerly known as twitter.com, and

15.3 billion total visits from Meta's facebook.com alone, which has had two decades to build its

audience. This count doesn't include Meta's audiences on Instagram or other platforms.

Meta has monetized its audience with a little over $35.6 billion in advertising revenue in the

first quarter of 2024.

Truth Social earned $770,000 in the same period.

Truth Social and other emerging platforms like Rumble and Telegram say they emphasize free speech and creator

control of content.

It's super important what Elon did as a as a nonprofit, but it's going to be tough as a business.

What about what about Truth Social?

Um, they have a they have a few other problems they have to solve first.

Platforms that do make money and that they are successful is that they appeal to

a broad cross section of all possible users.

And on truth Truth Social, it's pretty much mostly about politics, and that's always going to

limit potential user base of the platform.

Truth Social is the primary product of Trump Media and Technology Group.

The company describes itself as a powerhouse to rival the liberal media consortium, which it considers to be

Meta, Netflix, Alphabet and Amazon, among others.

Trump Media and Technology Group is the result of this Spac merger that was just completed in

late March.

A Spac, or special purpose acquisition company, is somewhat similar to the blank check companies of the

1990s.

These blank check company vehicles were disallowed.

Spacs grew out of that as an attempt to originally create a

legitimate company with real value.

The entity that backs Truth Social opened its doors to investors on September 8th, 2021.

Shares were sold at $10 per unit, raising $287.5 million in proceeds.

People that bought when it was tens higher than that have lost a lot of money.

So you have the cash in the Spac combined with Truth Social is now the public company, and the

holders, including Trump, now hold shares in that combined company.

The Trump Media group trades on the Nasdaq, the world's second biggest stock market exchange.

It began to trade publicly on March 26th, 2024.

It trades on the Nasdaq under the banner DJT, which are Trump's initials.

That's how its market capitalization is now numerous billions of dollars, even though its only

product doesn't create really much of any revenue at the moment.

In July, Trump Media was added to the Russell 1000 and 3000 indices.

The stock traded at about $33 per share at the end of 2024's first quarter, giving it a market

capitalization of about $6 billion.

Analysts are often vocally baffled about why the market capitalization for this company

is so high.

The revenue and the fundamentals of the company just don't reflect that.

In its first quarter earnings report, it showed that it had just about $770,000 in

revenue, and it posted a net loss of over $327 million.

So it's not bringing in a lot of money.

It's $3 million in revenues.

You have $5 billion out of a company that's doing 3 million in revenue.

That's the numbers as they currently stand.

A lot of analysts say that it is Trump who is the big draw for these retail investors.

And there are over 600,000 retail investors who are currently bought into the stock, according to

Trump Media.

Some market analysts say investing in the company is an act of faith.

I don't know whether the stock is going to go up or go down, but one thing is certain Donald Trump's going to

make a lot of money.

Are they looking at the projections of ad revenue?

I kind of doubt it.

If they were to look at it, would they believe the projections when ad revenue was very, very

low today?

I don't know.

So I don't know that in this case the projections are driving the

share price.

It could be, but I think it's more likely the share price is explained more by the, you know,

the meme stock phenomenon.

Donald Trump owns about 65% of the company behind Truth Social.

That stake alone was worth over $3.9 billion at the end of June 2024, not including

his warrant options on the same stock.

Trump's stake is huge.

He had something like a 57-58% stake in Trump media, and

about a month after the company went public and started trading on the Nasdaq, he got

36 million more shares and that equates to a couple billion dollars, even as the stock price

is swinging wildly up and down.

And so it's been a huge windfall for him.

So that raises a lot of questions about what Trump sees as the value of this social media

company. If he's going to just dump his stake, take the money and run and leave the company

kind of in the lurch, or if he really believes that it is going to do what it says it's going to do, which

is create this big bulwark against big Tech.

But in the meantime, it's been a pretty good trade for him so far.

SEC filings for the company say it could potentially fail to live up to its promise to generate users and

advertisers.

Social media traditionally makes money from advertisements and even more importantly,

from harvesting and analyzing and sharing our personal data and Truth

Social rely on this model for revenue.

The short answer is probably not.

Because the site is so small, it's significantly smaller than Facebook and

Twitter and even something like threads.

There have also been a tangle of other lawsuits, some of which are still ongoing.

Trump Media CEO and former Congressman Devin Nunes suggested that a small group of firms may

artificially be driving the stock price lower.

He wrote a letter to the Nasdaq saying that over 60% of the stock's trading activity came from four firms

Citadel Securities, Virtu Americas, G1 Execution Services and Jane Street Capital.

Truth Social and the companies mentioned did not respond to CNBC's requests for comment in time for this

report's publication.

Truth social could alter the 2024 election by bolstering the former president's finances and stirring

up support among his base.

It solidifies the base for Donald Trump and other right leaning politicians.

They all get together, they support one another.

They reinforce each other's beliefs.

Donald Trump could owe as much as $550 million from pending lawsuits.

Trump earlier this year was found liable for business fraud in New York.

He was ordered to pay a massive multi hundred million dollar settlement that's currently being appealed.

So he doesn't have to pay that right now.

And there's really no specific telling when that bill will come due if it ever does, because he might win the

appeal and it could be litigated for for many more months or potentially years.

So in the meantime, if he's able to cash out some of this stake in Trump media, then he

could potentially put that towards some of his legal fees.

The former president could cash out his position as soon as September 2024, according to the lockup

agreement between early investors.

I believe that Trump is locked up for six months.

At that point, he is going to be able to sell his shares.

In the meantime.

Might he have been hedging?

Might he have an arrangement with a bank under which he's able to cash out?

He's not supposed to under a lock up.

Typically, if he hasn't done that already, uh, he'll be able to do that in a few months.

Until then, the extent of the impact could be more limited.

Truth Social appears to be struggling to grow its US user base if the stock's price falls below $10 per

share ahead of September, the trade could turn out to be a loss for the early investors, not to mention the

bigger losses for the traders who bought at the top.

Certainly the most followed individual on Truth Social is Donald Trump, and he gets a lot of traction, a lot

of engagement for all of his posts on that platform.

It solidifies the base for Donald Trump and other right leaning politicians.

For example, on June 19th, Donald Trump published a truth

about Paul Ryan.

Paul Ryan had come out against Trump, and Trump was kind of lashing back.

The very next day, on June 20th, we saw that hashtag Paul

Ryan was trending.

Trump once had an exclusive contract to post on Truth Social, but communicating exclusively on the platform

could limit the former president's reach.

His account on X, formerly Twitter, has over 87 million followers on Truth Social.

The count is closer to 7 million.

You could say that in a sense, this started because of January 6th, the Capitol riot.

Within two days of January 6th, Trump had been kicked off of Twitter and Facebook and YouTube and

Instagram. And it was the next month that he started Trump Media and Technology Group.

Trump is possibly arguably their biggest draw as a company.

It's what differentiates them from other right leaning Twitter clone social media sites.

It is what brings a lot of people to the platform.