Truth Social going public is Trump’s latest attempt to raise money. I read the SEC filing notes and found some warnings. Maybe don’t bet your 401(k) on this one.
Trump’s Truth Social merger approved, set to go public on stock market
Donald Trump’s Truth Social is set to go public, with the former president’s stake in the company valued at $3.6 billion.
You may have heard – because the news was everywhere last week – that Donald Trump is suddenly a few billion dollars richer on paper after his social media site Truth Social went public Tuesday.
And you may be tempted to get in on the action for the new stock that inspired plenty of initial – even irrational? – exuberance in the market.
But take caution here, for the former one-term president has a very long history of business and personal calamities, along with a future that portends even more misfortune.
Don’t take my word for it.
That warning comes straight from two filings Truth Social submitted about Trump last month to the U.S. Securities and Exchange Commission, the agency in charge of protecting investors, maintaining orderly markets and “facilitating capital formation.”
Among the looming threats cited for the Republican nominee for president: He owes more than half a billon dollars in civil verdicts, has four pending criminal cases, has an extensive track record for businesses filing for bankruptcy protections and saw several entrepreneurial efforts totally flop.
Oh, and one SEC filing notes that Truth Social has such a limited reach with users that even Trump might migrate to another social media site like X, the hellscape formerly known as Twitter, to get a bigger audience.
Truth Social’s value “may diminish if the popularity of President Donald Trump were to suffer,” the SEC filing said.
A Pew Research Center poll released March 19 found 60% of Americans hold an unfavorable view of Trump.
Maybe don’t bet your 401(k) on this one.
Truth Social’s own numbers aren’t great
Trump, who owns 60% of the company that now controls Truth Social, is obligated in his license agreement to make “any non-political” posts there and then wait six hours before posting anywhere else, according to a Feb. 14 SEC filing that said the site “has limited time to benefit from his posts and followers may not find it compelling to use Truth Social to read his posts that quickly.”
The company also said Trump has “sole discretion” to use any social media website for “politically-related” posts. And the company “may lack any meaningful remedy if President Trump minimizes his use of Truth Social.”
I mean, you could say a thrice-married former real estate developer known for stiffing contractors for pay and dumping political allies in a fury has a reputation for just walking away.
Trump’s money problem: Biden and Trump are both in a world of hurt. But Biden has the cash to fix his problems.
Truth Social notes that it “will need millions” of users “to register and regularly use” the site to be successful.
The company cited a 2021 Hill-HarrisX poll that found 54% of registered voters would not use Truth Social, while 30% said they would and 16% said maybe. No surprise here: Those results varied by political affiliation – 78% of Democrats and 58% of independents wanted no part of Truth Social, while 54% of Republicans wanted to log on.
Twitter, now X, had 215 million active monthly users when it went public in 2013, Axios noted Wednesday, while Truth Social had just 5 million active monthly users when it went public Tuesday. X this month said it has 550 million active monthly users (X did not disclose how many of them are scam-bots trying to sell you bogus cryptocurrency).
The business model for now is upside down, with Truth Social putting up $3.3 million in sales in the first nine months of 2023 and losses of $49 million.
The stock was a rollercoaster ride last week, opening Tuesday at $70.90 per share and surging to $79.38 before dropping to $61.96 when the Nasdaq closed on Thursday. (The market…
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