Trump Media and Technology Group, the owner of former President Donald Trump's social networking platform Truth Social, reported a net loss exceeding $300 million in its first earnings report as a publicly traded company.
TOPSHOT - This illustration photo shows a person checking the app store on a smartphone for "Truth Social", with a photo of former US president Donald Trump on a computer screen in the background, in Los Angeles, October 20, 2021. - Former US president Donald Trump announced plans on October 20 to launch his own social networking platform called "TRUTH Social," which is expected to begin its beta launch for "invited guests" next month. The long-awaited platform will be owned by Trump Media & Technology Group (TMTG), which also intends to launch a subscription video on-demand service that will feature "non-woke" entertainment programming, the group said in a statement. CHRIS DELMAS/AFP via Getty Images
For the quarter ending March 31, Trump Media and Technology Group recorded a loss of $327.6 million. This figure included $311 million in non-cash expenses linked to its merger with Digital World Acquisition Corp., a special purpose acquisition company (SPAC).
SPACs are designed to expedite the process for young companies to begin trading publicly by merging with cash-rich entities seeking merger targets. The company generated $770,500 in revenue in the first quarter, primarily from its emerging advertising efforts.
This marks a decline from the $1.1 million in revenue recorded during the same period the previous year. In the same quarter last year, Trump Media reported a loss of $210,300.
Trump Media announced that its financial records underwent examination by Semple, Marchal & Cooper, its recently appointed accounting firm. This decision followed allegations of "massive fraud" leveled against the company's previous accounting firm by federal regulators earlier this month.
Accounting Firm Changes Amid Allegations of Fraud
Earlier this month, Trump Media and Technology Group dismissed its auditor, BF Borgers, whom federal regulators had recently accused of "massive fraud." The media company terminated BF Borgers as its independent public accounting firm on May 3, resulting in a delay in filing the quarterly earnings report.
CNN reported that Trump Media had previously changed auditors at least twice, with one resigning in July 2023 and another being dismissed by the board in March, right before BF Borgers was re-hired.
In after-hours trading, Trump Media's shares increased by 36 cents, reaching $48.74. The stock, listed under the ticker symbol "DJT," began trading on the Nasdaq in March and reached a high of nearly $80 later that same month.
Trump Media highlighted in its press release that, at this early stage of its growth, the company focuses more on developing products for the long run rather than just looking at quarterly earnings.
They recognized that their advertising efforts were still new and showed optimism about how new products like streaming services could help improve their future results.
Trump Media announced that it possesses ample cash reserves to sustain its operations for the foreseeable future. The company disclosed a cash balance of $274 million as of March's end, a figure bolstered by its recent public listing.
After an extensive and unprecedented process spanning several years, CEO Devin Nunes stated that the merger has been completed, and significant reductions in merger-related expenses have been achieved.
This outcome has left the company well-capitalized and supported by numerous retail shareholders who share their dedication to creating a platform for free speech and opposing Big Tech censorship.
