Former President Donald Trump has seen success with the launch of his social media company, Trump Media & Technology Group, which has gone public with a valuation of over $9 billion. However, their main product, the conservative-friendly social network Truth Social, has seen a decline in daily active users, dropping 19% year over year to about 113,000 users. This poses a problem for both Truth Social and Trump, who is the dominant shareholder and most popular user of the platform. The failure to grow users could adversely affect the business prospects of Trump Media according to their own filings.
User growth is crucial for social media startups as it leads to increased revenue from ads. Trump Media’s spokesperson has claimed that Truth Social continues to grow, despite the data showing a decline in users. Similarweb data also shows that other social media platforms are struggling to grow users and make money, but Truth Social’s decline exceeds that of most of its rivals. However, it did not lose users as rapidly as some other platforms like Gettr, which has lost 72% of its average daily users over the past year.
Web traffic for Truth Social also paints a grim picture, with a 12% year over year decline in daily unique US visitors. When combining web and app audiences, Truth Social represents less than 6% of the audience on Threads and less than 1% of X’s total audience. Tom Liu, vice president of data labs at Similarweb, notes that Truth Social’s valuation is high considering its small size compared to other social media players. The platform has to compete with X, owned by Elon Musk, for users who are concerned about censorship and big tech companies.
Donald Trump recently received a bonus of 36 million shares of Trump Media, increasing his stake in the company to $5.6 billion. However, he has agreed not to sell his stake for several months, making it difficult to predict its future value. Trump Media’s share price has been volatile since going public, reaching a high of $66 per share before crashing to $22.84 and then doubling in value to $48.68. This volatility raises questions about the true value of Trump Media and whether traditional metrics like growth and revenue really matter for the company.
Despite the challenges faced by Truth Social and Trump Media, there is a belief among some that the company is not a typical social media stock and can be untethered from traditional fundamentals. This viewpoint, known as the “meme stock argument,” suggests that while stocks may temporarily disconnect from their fundamentals, in the long run, valuation and fundamentals tend to converge. The future success of Trump Media and Truth Social will depend on their ability to attract and retain users, as well as their ability to differentiate themselves in a competitive social media landscape.
