Trump launches application with interface similar to Twitter 2:37

New York (CNN) --

Shares of Trump Media & Technology Group, which owns Truth Social, plummeted Monday after the company revealed it lost more than $58 million and generated very little revenue in 2023.


The numbers underscore why some experts warn that Trump Media's multibillion-dollar valuation defies logic and is reminiscent of the meme stock craze.

In a regulatory filing on Monday, Trump Media said it lost $58.2 million in 2023, compared with a profit of $50.5 million in 2022.

The Truth Social owner generated just $4.1 million in revenue, although that was up from $1.5 million in 2022.

Not only that, but revenue fell 39% year over year in the fourth quarter, to just $751,500. That's not what investors want to see from any startup, especially one valued at these levels.

Trump Media shares fell 24% Monday afternoon following the new data, although they are still up nearly 200% so far this year.

advertising

The losses are so severe that Trump Media's accountants warned that they "raise substantial doubts about its ability to continue as a going concern," which in Wall Street terms means, "we may not be able to remain in business." This warning echoes one made in November, when accountants said Trump Media might not survive unless it soon completed its merger to go public.

The long-delayed deal was completed last week, paving the way for Trump Media to receive an influx of approximately $300 million in cash. The company can now use those funds to pay down debt and, more importantly, to build its infrastructure.

"I think the $300 million in cash should eliminate this 'going concern' risk," said Matthew Kennedy, senior IPO strategist at Renaissance Capital.

Even though Trump Media is losing money and generating little revenue, Wall Street has valued the company at up to $11 billion based on the stock's closing price on Friday, according to Renaissance Capital.

While Trump Media only brought in $4.1 million in 2023, its rival Twitter also generated just over $5 billion in revenue in the last year before being privatized by Elon Musk.

The problem for Trump Media is that its main product, Truth Social, is shrinking.

Active monthly users in the US on iOS and Android fell in February to 494,000, down 51% year-over-year, according to Similarweb. By comparison, X has 75 million monthly active users in the U.S. Even Threads has more than 10 times as many users as Truth Social, according to Similarweb.

"2024 is the decisive year for this company," says Kennedy. "For TMTG, the important thing now is to enter the money cannon that is the 2024 presidential election. And the company has a notable advantage. Trump-backed independent campaign committees have raised millions. Where do you think they will spend their budgets? digital ads?"

StocksDonald Trump News