Trump Media & Technology Group Reports $770k in Ad Revenue, Eyes Growth Amid Losses


Truth Social Losses Were Less Than They Seemed

On Monday, Trump Media & Technology Group (TMTG), reported generating $770,000 in advertising revenue for the first quarter of the year from its Truth Social platform. The company faced a net loss of $327.6 million, primarily due to noncash expenses related to the conversion of promissory notes. Operating losses amounted to $12.1 million in the quarter, rising from $3.6 million in the same period last year.

The losses were welcomed by establishment media outlets, which have long predicted the failure of Trump Media. Initially, they speculated that the merger would never conclude. Now, they emphasize the losses and modest first-quarter revenue as indicators of impending failure.

Moreover, the operating loss was inflated by what the company described as one-time expenses related to the merger. These likely included fees for bankers and lawyers coordinating the deal, making up about half of the operating loss. Therefore, the run-rate operating loss is closer to $6 million.

The Amazon Lesson: Lose Early and Grow

Such figures might alarm traditional investors. However, reflecting on Amazon’s early years, substantial losses were not just common—they were strategic. Amazon willingly endured years of losses to expand aggressively, capture market share, and invest in infrastructure.

From 1995 to 2002, Amazon accumulated net losses exceeding $3 billion. Jeff Bezos recognized the need to sacrifice immediate profitability for growth to dominate the market. This strategy positioned Amazon as a leader in e-commerce and beyond.

Amazon founder and CEO Jeff Bezos poses for a portrait in Seattle, WA, circa 1997. (Paul Souders/Getty Images)

TMTG, with $274 million in cash and equivalents following its merger with Digital World Acquisition Corporation, has significant resources. This capital allows for aggressive investment in user acquisition, platform enhancement, and technological innovation.

Focusing solely on reducing losses would be shortsighted. The company needs to think big, aiming to scale Truth Social and diversify revenue streams beyond just advertising. One likely area of focus would be acquisitions of other media and technology companies targeting the same audience and user base as Truth Social, including emerging media outfits attached to notable conservative media figures.

CEO Devin Nunes hinted at this in the press release announcing the first-quarter results: “Our positive working capital allows us to explore and pursue a wide array of initiatives and innovations to build out the Truth Social platform including potential mergers and acquisitions activities.”

To meet the high expectations tied to its valuation, the company must prioritize growth over immediate profits. The path to success involves leveraging its cash reserves to expand its user base and improve its platform—actions that will eventually attract more advertisers and increase revenue. Investors will focus on the expansion of the audience and revenue rather than the bottom line in the coming year.

Donald Trump speaks during a campaign rally in Wildwood, New Jersey, on May 11, 2024. (JIM WATSON/AFP via Getty Images)

Current advertising revenue, annualizing to just over $3 million, indicates the nascent stage of TMTG’s advertising initiatives. This should be seen not as a limitation but as a starting point. Like Facebook and Twitter in their early stages, TMTG should aim to build a robust ecosystem that attracts advertisers by investing in user growth and platform capabilities.

Contrary to some media reports, the company has indeed replaced its auditors after the previous auditors opted to cease auditing public companies following fraud accusations by federal regulators. The quarterly report and financials were reviewed by Semple, Marchal & Cooper, LLP, which the company appointed as its independent registered public accounting firm earlier this month.

The key takeaway here is that substantial early losses are not an indicator of failure but an investment in future dominance. The hard truth for the company is that it probably is not losing money fast enough. It needs to show the courage to endure mounting quarterly losses to grow its fundamental business.

Trump Media & Technology Group must embrace this strategy to transform into a major player in the social media landscape. The example set by Amazon and other tech giants demonstrates that enduring significant financial challenges now can pave the way for long-term success.

John Carney
John Carney
Before I became a journalist, I practiced law at Skadden Arps and Latham & Watkins.

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