Truth Social has no advertising revenue, but banks on exclusive Donald Trump posts
Truth Social, a Donald Trump-backed social network, aims to attract an “open, free and honest global conversation” on its platform “without relying on hostile Big Tech companies,” according to a new regulatory filing that provided a glimpse does. Business.
One major obstacle to accomplishing that mission: The app has yet to attract any paying advertisers, a filing with the Securities and Exchange Commission shows. And its parent, Trump Media & Technology Group, is losing money and “expects to incur significant losses in the future,” the filing said.
In the short term, Truth Social appears to be banking on a deal that could help grow its user base: It will have a special six-hour window on Trump’s messages, according to the filing. This means that even if Twitter lifts its ban on Mr Trump – which Tesla founder Elon Musk said he would do if he carried out his proposed takeover of the media company – his comments on the blogging platform would keep coming. There may be a gap of an hour before or another stage.
According to a Digital World Acquisition Corp (DWAC) filing, “President Trump has agreed not to compete with Truth Social for his own benefit,” merging with Trump Media & Technology Group, or TMTG. The filing is a registration statement, or S-4, with the SEC regarding the proposed merger.
To be sure, Mr. Trump is not the only user of Truth Social – he will serve as chairman of the new company following the merger and stand to benefit from its success, as he is also a major shareholder. TMTG, in turn, said that in order to be successful, Trump needed to attract “millions” of his supporters to register and use its platforms on a regular basis.
The real test may be whether Truth Social can turn the six-hour start on Trump’s messages into revenue — so far, ad sales are nonexistent, according to regulatory filings. The company has yet to begin charging advertisers, and it cannot book any ad sales from Truth Social until 2023, the filing said.
Whether advertisers will shell out their pockets for Truth Social in the long run remains uncertain, with many advertisers preferring to sidestep content seen as openly political or controversial. Nevertheless, investors were pleased with the S-4 filing and the companies’ disclosure that the merger would take place in the second half of 2022, giving TMTG net income of $1.25 billion, the companies said in a joint statement issued Monday.
Shares of DWAC rose $3, or 7%, to $44.98 in Monday afternoon trading.
Incredible loophole?
Truth Social’s rights to Trump’s posts have some limits. For example, the licensing agreement allows the former president to post messages from his personal profile that relate to political messaging, fundraising or vote-out-the-vote efforts. ,at any time on any social media site.” According to the filing.
This is a fairly widespread loophole that could potentially reduce the exclusive impact of Truth Social on messages from the former president. So far, Trump hasn’t been too prolific on Truth Social, posting 95 “truths” — the site’s terms for messages — since the service launched earlier this year.
Elon Musk says he will lift Twitter’s ban on Donald Trump 04:13
Meanwhile, TMTG said it would use the proceeds of $1.25 billion to continue developing the platform. In an investor presentation last year, the company said it expects 56 million users by 2024, which it believes will help drive sales of $835 million.
For now, the company has a long way to go: In 2021, TMTG booked just $2.1 million in “related party” sales from a “licensing agreement with a stockholder,” though the filing doesn’t provide additional details. Last year it had a loss of $59 million.
Several of Trump’s 66 pages of filings of potential risks to investors pertain to Trump, including whether he was “struggling to be able to dedicate enough time to truth social.” Trump’s death, incapacity or loss from “multiple” lawsuits could also affect the company’s success, the filing warned.
And it marks the business of Mr. Trump’s previous track record: “Many companies that were linked to President Trump have filed for bankruptcy. There can be no assurance that TMTG will not go bankrupt either.”
