Trump Media & Technology Group shares plunge over 13% amid financial concerns

Shares of Trump Media & Techlogy Group fell by more than 13 per cent on April 1, following revelations that Truth Social parent company is grappling with financial uncertainties shortly after its recent public debut through a blank-check merger.

According to filings, company reported a net loss of $58.2 million for fiscal year ending December 2023, a significant downturn from $50.5 million net profit recorded in previous year. 

Despite an increase in revenue to $4.13 million in 2023 from $1.47 million in 2022, Trump Media & Techlogy Group raised concerns about its ability to meet financial obligations, citing doubts about its ability to dress liabilities, including those tied to previously issued promissory tes.

company anticipates continued operating losses and negative cash flows as it strives to expand its user base, attract platform partners, and secure vertisers. 

Despite a promising initial surge of over 16 per cent on its first tring day fueled by retail investors, including supporters of former President Donald Trump, stock has encountered volatility, experiencing its second consecutive session of decline on April 1.

In March, former President edged on securing a table investment amount from his stake in social media app Truth Social, via a merger deal valued at about $5.7 billion. 

merger comes as Trump navigates financial ramifications of various legal proceedings, including a $454 million judgement in a civil fraud case in New York.

Set to take place with Digital World Acquisition Corp (DWAC), a special purpose acquisition company (SPAC), merger aims to bring Trump Media & Techlogy Group (TMTG) to stock market. 

Shareholders of DWAC have shown ir support for merger, paving way for its completion in near future, although deal faces several hurdles including lawsuits demanding a greater share allocation for former associates involved in deal's early sts.

Despite se challenges, merger is anticipated to provide TMTG, parent company of Truth Social, with a crucial $300 million cash infusion. This comes at a time when company has reported operational losses and has been sustaining itself through loans convertible into stock.

valuation of TMTG could soar to as much as $5.7 billion upon merger's completion, a figure that could increase furr when accounting for ditional warrants and shares. This valuation spike is largely fueled by enthusiastic support of Trump's followers and retail investors, despite recent dips in Digital World's stock price following merger's approval.

(With Reuters Inputs)