The Truth social network logo is seen on a smartphone in front of a display of former U.S. President Donald Trump in this picture illustration taken February 21, 2022.
Dado Ruvic | Reuters
Truth Social, the brain child of former President Donald Trump, is hemorrhaging cash.
The alternative social media platform has lost $73 million in the less than two years since it launched, according to a new filing from Digital World Acquisition Corporation, or DWAC, the special purpose acquisition company aiming to take Trump Media and Technology Group, or TMTG, public.
In its first fiscal year ending Dec. 2022, TMTG, Truth Social’s parent company, lost over $50 million on $1.4 million in sales. In the first half of 2023, it has lost an additional $23 million on $2.3 million in sales, according to the filing.
The news of the losses comes as Trump faces a slew of criminal investigations, while also leading the polls among the 2024 Republican presidential candidates. President Joe Biden’s campaign made a Truth Social account in October and gained more followers on the platform than Trump’s own campaign account.
As Truth Social bleeds, the potential merger with DWAC has become an existential necessity for TMTG.
The filing said that TMTG’s negative cash flow and persistent losses have raised “substantial doubt” about the company’s ability to continue operating in its current state. Merging with DWAC would provide sufficient capital to pay off TMTG’s heavy debt load, and keep operations going as cash flow falters.
DWAC announced on Monday that it filed an S-4 form with the Securities and Exchange Commission, the next step to proceed with the TMTG merger. TMTG CEO Devin Nunes called the move a “monumental milestone” in the pursuit of a merger and remained optimistic about the future of Truth Social.
“Truth Social aims to be more than a social media platform-we aspire to become the centerpiece of a movement, as well as a method for Americans to invest in their freedom,” Nunes added in a statement.
If the merger does not happen, the filing noted that TMTG would become unable to “fully develop” Truth Social.
Truth Social was born in Feb. 2022 after Trump was banned from several mainstream social media sites like Twitter and Facebook following the Jan. 6 storming of the U.S. Capitol carried out by many Trump supporters.
Given that origin story, Truth Social has branded itself as a safe haven from “Big Tech censorship,” a vision that must be realized for Truth Social to maintain any sort of competitive advantage, according to the filing.
The filing pointed out that the new leadership of X, which was bought by Tesla CEO Elon Musk in Oct. 2022, has put more of an emphasis on free speech, which could heighten competition for Truth Social’s user base and threaten the success of the brand.
Trump returned to X, the platform formerly known as Twitter, in August, though he has said Truth Social is still his primary social media platform.
Trump’s presence on Truth Social started as a boon for the company but has now become a crutch. The filing noted that if Trump stopped devoting “substantial time to Truth Social” or if he “fails to retain the public’s interest,” then TMTG would financially suffer even more.
But even the former president’s loyalty to Truth Social may not be enough to keep the platform afloat on its own.
“TMTG may not be successful in its efforts to grow and monetize Truth Social,” said the filing.