On Reddit and Truth Social, users have tried to recreate the meme magic for Trump Media and Technology Group, the company behind Truth Social, which boosted companies like Gamestop in 2021. So far they haven’t been that successful.
Truth Social, former President Donald Trump’s Twitter copycat, is missing two key ingredients in the story of past campaigns: underlying fundamentals and the hostility of institutional investors. Major hedge funds had shorted Gamestop, thinking the price would fall. This time the shares are mainly owned by private investors.
Unlike other social media companies, the company does not disclose how many users it has, but previously said only 9 million people have signed up for the site, compared to more than three billion monthly active users on Facebook. TruthSocial visitors fell from 5.4 million in January to about 5 million in February, according to web analytics firm SimilarWeb. The site’s lack of users has contributed to its poor financial performance.
On the Wallstreetbets subreddit, home of meme stock boosterism, most users aren’t buying what Truth Social is selling.
“If you invest in this long enough, you lose everything. So it’s strictly a movement game,” wrote Reddit user Rich4718. “If you think Donald Trump is going to create an income-positive social media platform, you are an absolute idiot.”
The company started trading publicly last week and has already experienced wild price swings. On Monday, the stock fell nearly 20 percent, wiping out $2 billion in value.
In a filing on Monday, the company said it had just over $4 million in revenue and $58 million in net losses. This comes after Trump Media and Technology Group’s accountant made a surprising admission: the company’s losses “raise significant doubt about its ability to continue as a going concern.” This is evident from a filing with the Securities and Exchange Commission on March 25.
And yet the company is valued at around $7 billion, despite reported significant losses. The valuation is partly supported by Trump fans who see investing in the company as a way to support the former president. In some cases, these investors genuinely believe that Truth Social could become a major player in the social media space.
Albert Choi, a law professor at the University of Michigan, says investors in Trump Media may be motivated by factors beyond traditional financial logic, such as driving up the price by generating hype.
“If that’s your main motivating factor, then you don’t really care whether the company is actually making money,” says Choi.
“I believe DJT is an investment in Donald Trump, not just Truth Social,” Reddit user Autsauce, who declined to share his real name, tells WIRED. “If market participants start asking that question, and I bet they will, they will likely arrive at a very different price and value Truth Social in a silo.”
Choi noted that Trump winning the presidential election could actually hurt the company’s stock, as investors’ perceived need to financially support the former president through investing could disappear.
“My assessment is that interest in the stock will largely disappear,” Choi said.