Trump Abandons Truth Social, Embraces X and Elon Musk in Panic

Investors in Trump Media & Technology Group Corp. were previously warned of the risks associated with their holdings. Following the insurrection of 2021 and Trump’s subsequent ban from Twitter, the former president turned to his social media platform, Truth Social, which launched in 2022. It was an effort to carve out his online presence after his removal from a platform that had once given him substantial reach.

With the acquisition of Twitter by Elon Musk, who is arguably just as keen for publicity as Trump, the former president’s ban was lifted. Musk repurposed the platform into what many now refer to as X, a hub for misinformation. Trump finally made a return to the platform on Monday after nearly a year of absence, but his much-anticipated comeback was see as a disorganized two-hour interview filled with glitches, leaving viewers asking what the point of the conversation had been.

If the stock price of Truth Social could serve as an indicator of public sentiment regarding Trump’s return to X, it would suggest a negative impact. On Tuesday, the stock hit its lowest point in four months, highlighting ongoing volatility for a company that has been on a precarious financial rollercoaster.

The management team behind Truth Social had anticipated challenges like this for some time. The company’s ongoing financial struggles have surfaced consistently in various reports submitted to the Securities and Exchange Commission, the agency that oversees the stock market.

Recent disclosures revealed that Truth Social incurred over $16 million in losses with less than $1 million in revenue during the second quarter. A significant portion of the losses stemmed from legal expenses related to Trump’s merger in March and costs associated with the company’s new streaming service. As these losses mount, there have been repeated reminders in official filings about Trump’s unilateral control over the platform’s messaging.

The implications of Trump’s license agreement with Truth Social include complete freedom to dictate what kind of political communication he promotes across platforms. This presents an obvious risk; should Trump choose to promote his messages on more influential platforms like X, it could severely negatively impact Truth Social’s viability.

For Trump himself, the stakes are quite personal. He holds almost 115 million shares of Truth Social, which amounts to around a 60% ownership stake. Therefore, the consequences of poor performance in the stock market weigh heavily on him as well, leading to heightened interest in his relationship with X and Musk.

As Trump navigates the political landscape leading into the election, he seems increasingly anxious about remaining relevant amidst surging competition. Vice President Kamala Harris has recently garnered substantial media attention, while Trump appears to struggle to reclaim the spotlight. Since launching his re-election bid in November 2022, his public engagements have been infrequent, including a traditional press conference that took place long after he initially declared his candidacy.

Harris launched her own campaign last month and has quickly gained traction, aided by effective public appearances and events that include announcing her running mate, Governor Tim Walz of Minnesota. With the Democratic National Convention on the horizon, she has even more opportunities to cement her presence and popularity.

In the meantime, Trump’s rhetoric appears increasingly desperate as he targets Harris’s campaign publicly while ignoring the fact that he, too, was slow to engage with the press. The lack of a proactive response to political developments adds to this uncertainty, especially as polls show Harris gaining ground.

Interestingly, Trump’s alliance with Musk has evolved, considering that Musk had once voiced skepticism towards Trump’s candidacy. Trump’s tracks have shifted from critical remarks about electric vehicles to mildly endorsing them, perhaps as an indirect acknowledgment of Musk’s support for him.

Despite a notable absence of discussion regarding Truth Social during Trump’s interview with Musk, it’s clear the struggles of the platform weigh heavily on Trump’s mind. Following this interview, Trump attempted to re-establish his relevance on Truth Social by declaring the chat with Musk a resounding success, despite the platform’s ongoing financial challenges.

It remains evident that investors in Trump Media & Technology Group cannot claim ignorance about the precarious position of their investment. The warning signs were clear long before Trump made his recent moves.

Source: USA Today