Trump Media & Technology Group, the parent company of Truth Social, which is majority owned by former President Donald Trump, released an informative report this morning detailing how Trump himself poses a threat to the company and its shareholders. documents were submitted to the Securities and Exchange Commission.
The company's 2023 revenue was just over $4 million, but Trump Media's valuation has fluctuated wildly since it went public in March, at one point reaching more than $7 billion. As of this morning, the company is valued at $3.7 billion. Trump Media has become a meme stock, with its stock price driven more by mood than traditional financial performance.
Trump Media's SEC filing this morning announcing its 21.5 million-share public offering also details the company's “risk factors.” These statements are standard for publicly traded companies and typically include everything from macroeconomic headwinds to worst-case scenarios such as earthquakes or terrorist attacks. The filing includes several risk factors not directly related to President Trump, including competition from other social media companies, bookkeeping and accounting deficiencies, and data privacy laws. And the company is facing multiple lawsuits from early employees who say they deserve more stock.
However, Truth Social's risk factors are unique because an entire section is devoted to Trump-related risks, and Trump's role as chief promoter and major shareholder poses a threat to the company's success. ing.
“TMTG is subject to greater risk than typical social media platforms due to the focus on its offerings and its involvement with President Donald J. Trump,” the company said in an SEC filing. There is a possibility.” “These risks include a reduction in user engagement, harassment of advertisers and content providers, increased risk of hacking of the TMTG platform, and the need for Truth Social if First Amendment speech is not suppressed.” These include a decline in gender equality, criticism of Truth Social over its moderation practices, and an increase in shareholder lawsuits.
Trump Media has said that Trump himself could threaten the company.
President Trump's legal issues
Trump Media says that Trump has “severed ties with TMTG due to death, disability, conviction, incarceration, or other reasons, or limited his involvement with TMTG due to his ongoing candidacy for political office.” TMTG would be at a significant disadvantage.” ”
President Trump's Bankruptcy History
“Companies associated with President Donald J. Trump have filed for bankruptcy protection in the past,” the company said in its filing, which includes the Trump Taj Mahal, Trump Plaza, Trump Castle and The Trump Castle.・The Plaza Hotel and Trump Entertainment Resorts have pointed this out. Inc. had previously filed for bankruptcy.
“Although all of the aforementioned companies were engaged in businesses distinct from TMTG, there can be no assurance that TMTG's results of operations will exceed those of these entities,” the filing states.
Other companies also refuse to partner with Truth Social
“To date, several potential third-party partners have expressed reluctance or reluctance to develop products or provide services to TMTG for reasons including TMTG’s ties to President Donald J. Trump. “,” the application states.
President Trump's Use of Other Platforms
The company warned that its business would be negatively affected if President Trump stopped using Truth Social.
President Trump has agreed to post all content he deems “apolitical” to Truth Social first, and must wait six hours before posting it to the website. But as a political candidate, Trump may be able to claim that everything he posts is political. That means the company doesn't have much power even if Trump wants to start tweeting again.
“Therefore, if President Donald J. Trump minimizes his use of Truth Social, TMTG may lack meaningful relief,” the filing states.
politically motivated hackers
President Trump's involvement has made the company a prime target for hackers, according to the filing.
“We believe TMTG is a particularly attractive target for such breaches and attacks, including attacks from nation states, highly sophisticated state-sponsored, or other well-funded attackers. ” the company said in the filing. “And TMTG may face increased risks from time to time as a result of geopolitical events.”
Trump's self-interest
Mr. Trump, who owns 57.6% of Trump Media, may manipulate the company to his benefit in a different way than other investors in Trump Media.
“As a controlling shareholder, President Donald J. Trump has the right to vote the shares in his own interest, which may not necessarily be in the interest of TMTG stockholders generally,” the filing states. .