Just 1.2 Million U.S. Businesses Have Complied With the 2021 Corporate Transparency Act. The Treasury Is Pleased Wi...
José Andrés's World Central Kitchen Suspends Operations in Gaza After 7 Workers Are Killed
Despite Stubborn Inflation, Small-Business Owners Are Gaining Confidence in the Economy
What the Right to Disconnect Could Mean for California Employers
Workers Crave Career Growth. Employers May Not Be Paying Attention
Why Chipotle Made Its Own Video Game to Give Away $1 Million Worth of Burritos
Lab-Grown Meat Could Be Banned in Several States. Here's Why
How attractive to investors is a company that confirms, in detail, that it has no idea how its business will turn out over the next year or so? And no plans to collect critical information on how well it is performing?
Attractive enough to make it worth $8 billion--at least for a moment. That company is Trump Media & Technology Group (TMTG), the entity behind the social media platform Truth Social, which started publicly trading this week after its merger with Digital World Acquisition Corp., a blank check or special purpose acquisition company. Former president Donald Trump controls 57.6 percent of the shares and is the show pony of the platform.
TMTG's stock debuted at $49.90 on March 25 but Trump fans drove the shares to $79.38 the following day. But then the company filed its 8-K statement with the Securities and Exchange Commission, which revealed that TMTG had lost nearly $60 million in 2023 on revenue of $4.1 million. Gravity ensued, dropping the share price 21 percent to below its initial offering price before rallying a bit.
Companies must file 8-Ks when there is a "material" change to their operation, such as the merger that created the public TMTG. For Trump, who hasn't been involved in an IPO since he took his casino company public in 1995 (Trump Hotels and Casino Resorts would ultimately fail), SEC regulations demand more transparency. In the 8-K, the now-public TMTG outlined not only the risk factors the company faces but also its plans to deal with them. In 8-K filings, it's not unusual for a company to express some doubts about the future, but it's usually boilerplate stuff.
This is where it gets interesting, given that TMTG plans to do essentially nothing about the risk it faces. In its disclosures, the company noted 20 separate risk factors in three different categories that could impede its development. The categories include TMTG's ability to run the business--call it execution risk; the stock's performance--market risk; and Trump himself--call that existential risk. Within those categories is everything from Truth Social's ability to attract users and advertisers to its ability to maintain its listing on NASDAQ, should the stock price fall too much.
As for Trump himself, there's this one: "An adverse outcome in one or more of the ongoing legal proceedings could negatively impact TMTG." That's because posting from prison could prove difficult. "The risks described under the heading "Risk Factors" are not exhaustive," the company concludes--although as a potential investor, you might call them exhausting.
Seeing around corners is difficult for any company. But shutting your eyes, which is what TMTG's operating strategy seems to be, is choosing to fly blind. TMTG disclosed that it will neither seek nor make public the standard measures of social platform performance that might provide some insights into running its business. "At this juncture in its development," the company said in its filing, "TMTG believes that adhering to traditional key performance indicators, such as signups, average revenue per user, ad impressions and pricing, or active user accounts including monthly and daily active users, could potentially divert its focus from strategic evaluation with respect to the progress and growth of its business."
It's not going to count the number of customers it has, for instance. This is all sort of odd, because adhering to industry metrics is generally associated with running and growing a social platform or just about any business. As the old maxim goes: if you can't measure it, you can't manage it.
Maybe that's the point, since there's not that there's not much here to manage. TMTG's revenue is still anemic. The company brought in less than $1 million in sales in the fourth quarter of 2023. No wonder TMTG chose to list its Consolidated Statement of Operations in Exhibit 99.2 out of 99.4.
The disclosures in the 8-K and the subsequent selloff of TMTG still left the company with a market value of some $7 billion. That's an extraordinary premium to sales, which is why technical analysts view the stock as highly overvalued.
In a rational market, investors would mark TMTG down, perhaps to as little as $2 a share, as one analyst suggested. But we are a long way from rational anything at the moment, and TMTG's 8-K merely underscores the point.
Now accepting applications for Inc.’s Best Workplace awards. Apply by February 16 for your chance to be featured!
The Daily Digest for Entrepreneurs and Business Leaders
Privacy Policy
Trump's Truth Social Filings Offer a Window Into How He Does Business
11
0
04.04.2024
Just 1.2 Million U.S. Businesses Have Complied With the 2021 Corporate Transparency Act. The Treasury Is Pleased Wi...
José Andrés's World Central Kitchen Suspends Operations in Gaza After 7 Workers Are Killed
Despite Stubborn Inflation, Small-Business Owners Are Gaining Confidence in the Economy
What the Right to Disconnect Could Mean for California Employers
Workers Crave Career Growth. Employers May Not Be Paying Attention
Why Chipotle Made Its Own Video Game to Give Away $1 Million Worth of Burritos
Lab-Grown Meat Could Be Banned in Several States. Here's Why
How attractive to investors is a company that confirms, in detail, that it has no idea how its business will turn out over the next year or so? And no plans to collect critical information on how well it is performing?
Attractive enough to make it worth $8 billion--at least for a moment. That company is Trump Media & Technology Group (TMTG), the entity behind the social media platform Truth Social, which started publicly trading this week after its merger with Digital World Acquisition Corp., a blank check or special purpose acquisition company. Former president Donald Trump controls 57.6 percent of........
© Inc.com
visit website
login
who are we?
contact us
qosheapp
Toi Staff
Gideon Levy
Belen Fernandez
Mort Laitner
Rami G Khouri
Ali Fathollah-Nejad
Nikkei Editorial
