The newly launched social media platform Truth Social, owned by Donald Trump, has caught the attention of investors as it goes public on the Nasdaq. Despite being launched just two years ago and having less than 9 million users, the platform has been valued at a staggering $10 billion. This rapid growth in valuation is not uncommon in the tech industry, as seen with Elon Musk’s acquisition of Twitter for $44 billion and Snapchat’s founders being offered $2 billion by Facebook when the platform was new.
The potential for immense wealth in the social media industry lies in the ability to attract users who are attractive to advertisers and gather user data that can be monetized. This is the key to success in the industry, according to Dr. John M. Veitch, CFA, Dean for the School of Business and Management at Notre Dame de Namur University. If a platform can achieve these goals, it has the potential to make its creator extraordinarily wealthy. However, there is a moral dilemma associated with monetizing user data and interests, which may haunt individuals despite their financial success.
Former President Donald Trump’s net worth has more than doubled with the successful public offering of Truth Social, boosting his wealth by $5 billion. Despite generating less than $5 million in revenue in 2023 and operating at a loss, the platform has been valued in the billions, following a trend seen in other social media companies. Social media platforms are often valued based on the number of users and Average Revenue per User (ARPU) or Value per Active User (VPAU), which predict future revenue generation.
The valuation of Truth Social is also influenced by its connection to Trump and the unwavering loyalty of his core base of supporters. This demographic forms a significant portion of the platform’s user base and is highly engaged, providing a stable foundation for advertisers and investors. The loyalty of these users ensures consistent engagement and data generation, stabilizing the platform’s revenue streams. Furthermore, Trump’s association with the platform amplifies its visibility and influence within certain segments of the political and social spectrum, enhancing its value even further.
The combination of a loyal user base, potential for targeted advertising, strategic partnerships, and influence on media and political discourse all contribute to the valuation of Truth Social. These factors also highlight the broader dynamics that influence the valuation of social media platforms, where user engagement, data monetization, and the ability to shape public discourse play key roles. The success of Truth Social demonstrates the potential for rapid wealth creation in the social media industry, especially when combined with a high-profile figure like Donald Trump.
