Down goes Truth Social

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Today the stock price of the parent company of Trump’s crappy Truth Social platform is tanking. Less than a week after going public via a merger with shady SPAC (Special Purchase Acquisition Company), aka a shell company, the listing on the NASDAQ of Trump Media & Technology Group under stock ticker DJT fell 25%.

Going public obligates a company to remain in compliance with stringent SEC reporting requirements. And yet, Trump was willing to take his company public knowing he would have to publicly disclose any significant financial developments. Today’s public filing was of its “Going Concern” status for the company’s ability to meet its debt servicing requirements.

On the first day of trading on the NASAQ, March 27, 2024, the DJT stock price rose 14% to a high of $66. Then on April 1, 2024, the stock price fell to about $47 after the “Going Concern” filing. The only brokers who made money on this stock shorted it. The “short interest” in DJT stock is about 11%, while average short interest in public companies is around 3-4%.

Consequences of disclosures such as a “Going Concern” or a “Qualified Opinion” by the company’s auditors include potential delisting from its stock exchange. The NASDAQ won’t allow just any company to be traded on its exchange. Each company must meet at least one of the four listing requirements, including pre-tax earnings of at least $2.2 million in the past two years and no single year in the prior three years can have a net loss.

Considered a “meme-friendly” stock, the new Going Concern filing reported that Truth Social brought in $3.4 million in revenues and lost $49 million in the first nine months of last year. Compare that to the recent meme-friendly public stock offering of Reddit, which now has a market cap of about $7 billion, and annual revenues of around $800 million. I’m curious to see how long the DJT stock will even remain listed on the NASDAQ. On the other hand, I think I’ll purchase some shares of Reddit right now.

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