On Friday, shares of Truth Social, the social media company founded by former President Donald Trump, experienced a significant drop of 14% following the announcement of a legal verdict. While the stock recovered slightly to end the day down by 6%, the company still saw a market value loss exceeding $500 million. The initial sharp decline was mitigated as buyers rallied, but the day still concluded with a substantial hit to the company's valuation.
Initial Drop and Recovery: Truth Social's stock fell by 14% but rebounded to close at a 6% loss, equating to a $550 million decrease in market value.
Trump’s Financial Impact: Donald Trump, who owns 65% of Truth Social's shares, saw a personal paper loss of approximately $357 million.
Company's Performance: Trump Media and Technology Group, which owns Truth Social, reported revenues of $770,000 in the first quarter but faced a significant loss of $327.6 million.
Platform Dependency: The future of Truth Social is uncertain, especially if Trump is banned from social media following his conviction on July 11, as the platform heavily relies on his posts.
Campaign Donations: Despite the stock drop, Trump received nearly $35 million in small campaign donations from his supporters post-verdict, doubling the previous single-day record.
Financial and Operational Overview
Truth Social's market performance highlights its volatility and the heavy reliance on Donald Trump’s popularity rather than solid economic performance. The company’s revenue figures indicate modest earnings compared to the substantial losses reported. This disparity underscores the challenges Truth Social faces in achieving financial stability.
Trump’s Stake and Loss
Trump’s 65% ownership in Truth Social is currently valued at $5.6 billion, though he is unable to sell his shares at this time. The stock's downturn translates to a significant loss in value for Trump, emphasizing the financial risks tied to his legal and political fortunes.
Future Uncertainties
The potential for Trump to receive a social media ban poses a significant threat to Truth Social's operational viability. The platform’s dependence on Trump’s activity raises concerns about its sustainability in the absence of its key figure.
Campaign Donations Surge
Interestingly, the legal challenges appear to have galvanized Trump’s supporter base, leading to an unprecedented surge in campaign donations. This influx of nearly $35 million in one day illustrates the strong backing Trump still commands despite his legal troubles.
Truth Social’s recent stock performance and financial health paint a complex picture of a company deeply intertwined with Donald Trump’s personal brand and legal issues. While the stock's partial recovery mitigates some immediate losses, the broader implications for the company’s future remain uncertain. The substantial campaign donations post-verdict reflect Trump's enduring influence and the fervent support of his base, which could play a critical role in the company’s resilience moving forward.
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Source: USA Today
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