Donald Trump’s return to X, formerly Twitter, sparks concerns over Truth Social’s future and the viability of its parent company, Trump Media and Technology Group (TMTG).
At a Glance
- Trump participated in a livestreamed conversation on X with Elon Musk
- Truth Social’s stock dropped 5% on the day of Trump’s X appearance
- TMTG reported a $16.4 million loss in its latest quarterly earnings
- Trump’s social media exclusivity agreement with Truth Social may not be renewed
- Investors worry about Truth Social’s future without Trump’s undivided attention
Trump’s X Return Raises Questions About Truth Social’s Viability
Former President Donald Trump’s recent appearance on X, the platform formerly known as Twitter, has sent ripples through the social media landscape and raised questions about the future of his own platform, Truth Social. In a three-hour livestreamed conversation with X owner Elon Musk, Trump made his first significant return to the platform since his ban following the January 6 Capitol riot. This move has sparked concerns among investors and analysts about the viability of Truth Social and its parent company, Trump Media and Technology Group (TMTG).
The impact of Trump’s X appearance was immediately felt by Truth Social. Shares in the company, partly owned by Trump, dropped 5% on the same day and have plummeted nearly 60% this year. These financial woes are compounded by TMTG’s latest quarterly earnings report, which revealed a 30% revenue drop to $836,900 and a total loss of $16.4 million. The stark contrast in user base between X and Truth Social—86.4 million followers on X compared to 4.59 million on Truth Social—further highlights the potential consequences of Trump’s platform shift.
The Importance of Trump’s Social Media Presence
Trump’s social media presence has been a cornerstone of his political strategy since his 2016 presidential campaign. His ability to communicate directly with supporters and dominate news cycles through social media has been unparalleled in American politics. This influence is underscored by Dan Pfeiffer, former Obama advisor, who stated:
“From 2015 until Jan. 6, 2021, Donald Trump was defined by Twitter. He used the platform to drive his message, savage his rivals, and control the four corners of the political conversation.”
The significance of Trump’s social media presence is not lost on TMTG. The company’s business plan heavily relies on Trump’s ability to bring his followers to their platform. This dependency is clearly stated in TMTG’s own documents:
“The value of TMTG’s brand may diminish if the popularity of President Trump were to suffer. Adverse reactions to publicity relating to President Trump, or the loss of his services, could adversely affect TMTG’s revenues, results of operations and its ability to maintain or generate a consumer base.”
The Future of Truth Social and TMTG
The future of Truth Social and TMTG now hangs in the balance. Trump’s social media exclusivity agreement with Truth Social, which requires him to post there first before other platforms, may not be renewed. This potential shift in strategy could significantly impact Truth Social’s user base and, consequently, its financial stability. Jay Ritter, a finance professor at the University of Florida, summarizes the dilemma:
“Trump has a decision to make: Does he start to use Twitter again, or does he use Trump Media sites exclusively for getting his message out? Trump Media would be worth more if he uses it exclusively, but he is likely to reach a larger audience with Twitter.”
As the 2024 election approaches, Trump’s social media strategy will be crucial. Marketing expert Eric Dahan suggests that Trump should maintain both X and Truth Social accounts to maximize his reach. However, this approach may not be enough to sustain Truth Social if Trump’s primary focus shifts to X. With TMTG’s financial struggles and the uncertain future of its merger with Digital World Acquisition Corp, the company faces significant challenges in the coming months.
Trump’s victory in November is much more important than the few hundred dollars I have invested in Truth Social as a retail investor. It would be nice if he supported those of us who have supported him. He can and has to use Twitter, but he can put more emphasis on TMTG when he speaks to the American people.