Trump’s social media platform claims to surpass ‘traditional key performance indicators,’ but an auditor casts doubt on its ability to remain a going concern

Trump’s social media platform claims to surpass ‘traditional key performance indicators,’ but an auditor casts doubt on its ability to remain a going concern

Former President Donald Trump’s social media company does not rely on traditional performance metrics and has no plans to do so anytime soon, according to a regulatory filing on Monday which also revealed losses that sent the stock tumbling.

While social media giants like Facebook Parent Meta typically reports numbers such as monthly active users to gauge the level of engagement generated by a platform, Truth Social parent Trump Media & Technology Group (TMTG) pointed out that since its inception, the management did not use such data. Meanwhile, its auditor has filed what is colloquially known as a “going concern” notice – boilerplate for companies with low revenues and high losses that there is “substantial doubt as to to its ability to continue to function” in this way, in other words, it may not be able to continue to function. be a viable business.

For its part, regarding KPIs, the company said that these metrics “are not critical in the near future” due to the early development of the Truth Social platform.

“At this stage of its development, TMTG believes that adhering to traditional key performance indicators, such as registrations, average revenue per user, ad impressions and pricing, or active user accounts, including including monthly and daily active users, could potentially distract from its strategy. evaluation against the progress and growth of its business,” the company said in the filing. “TMTG believes that focusing on these KPIs may not be in the best interests of TMTG or its shareholders, as it could lead to short-term decision-making at the expense of innovation and long-term value creation .”

Nonetheless, the filing revealed that Truth Social had a total of about 9 million signups across iOS, Android, and the web as of mid-February.

Meanwhile, SimilarWeb estimated that Truth Social’s monthly website visits in February were 5 million worldwide. However, Reddits were 2 billion last month, according to SimilarWeb.

Shares of Trump Media & Technology Group fell 21.5% to close at $48.66 after an SEC filing showed the company lost $58.2 million last year on a turnover of 4.13 million dollars. The SPAC had gained meme stock status in the roughly week it was trading, climbing as high as $78 at one point, increasing Trump’s net worth.

Jay Ritter, a professor and stock IPO expert at the University of Florida’s Warrington College of Business, said it’s a perfectly viable business strategy to not worry about short-term profitability while a company increases its market share. But here it seems that every indicator the company can think of is not going in the right direction. “The company says, ‘we want to be dynamic and robust’ because none of those traditional metrics really work in their favor.”

“They don’t admit and say, ‘Our business model is failing,’” Ritter added.

Yet there have been more than one company that started with one business model, changed when it wasn’t working, and then became profitable. While that could happen in this case, the question is how cost-effective it will be, he said. “The valuation changes by the billions from day to day,” Ritter said.

Last week, Ritter suggested the stock price could fall 95% from its first day trading price of $57.99. That would be the upside potential, he said today.

TMTG, along with Truth Social, “aspires to build a media and technology powerhouse capable of competing with the liberal media consortium and promoting freedom of expression.” the company wrote in disclosures. It aims to compete X, Netflix, Alphabet, Amazon and other companies that, according to TMTG, “collude to restrict debate in America and censor voices that contradict their woke ideology.” The company merged with Digital World Acquisition Corp., a blank check company formed in 2020.

Among other disclosures made today, Digital World Acquisition Corp.’s accounting firm Adeptus Partners. wrote that it was uncertain that the company can continue its activities and that the merger can be completed on time. If this is not the case, “there will be a compulsory liquidation and subsequent dissolution of the company”.

“The financial statements do not include any adjustments that could result from the outcome of this uncertainty,” the accounting firm’s report said.

These types of statements in reports are not uncommon among companies without revenue, such as biotechnology companies, Ritter noted. It’s basically an accountant saying things can’t continue for long with low revenues and current losses, he said.

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