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Sunday, July 21, 2024

Another Trump business failure: His overhyped, money-losing social media operation

As failures mount in his dwindling "empire," the disgraced and criminally-indicted former president has lost another half-billion with his social media failure.
Another failed business of Donald J. Trump. (Photo by Olivier Douliery – Pool/Getty Images)

Forbes magazine, which tracks the doings and undoings of the uber-rich, reports another financial flop within the not-as-rich-as-we-claim Doandl Trump organization, nothing the distracted, criminally-indicted former president has lost at least a half-billion dollars with Truth Social, his personal social media flop.

“The former president’s fortune dropped from an estimated $3.2 billion last fall to $2.5 billion today,” reports Dan Alexander of Forbes. “The biggest reason? His social media business, once hyped to the moon, has come crashing down, erasing $550 million from his net worth—so far.”

Alexander writes:

In October 2021, Donald Trump was eager for revenge. Nine months earlier he had been banned from Twitter, depriving him of his primary means of communicating with his followers. His solution? Build his own Twitter. Dubbed Truth Social, it had the potential to boost Trump’s fortune by billions. As soon as he announced the plan, supporters piled into Truth Social’s special purpose acquisition company, or SPAC. Shares of the SPAC, Digital World Acquisition Corp., shot up from $10 to $175 in two days, implying that the business was worth $22 billion, his interest amounting to $19 billion.

The hype never lined up with reality. In December 2021, a group of big-money investors promised to inject $1 billion in cash into the venture—but only if they got a sweetheart deal. By that point, shares were trading for $45 on the open market. But under the agreement, the new investors would be guaranteed a profit as long as the shares stayed above $10. When previously estimating the value of Trump’s stake, Forbes used that $10-per-share figure and came to $730 million.

But things have changed. Even Trump’s die-hard fans are not as excited by Truth Social as they once were. The Department of Justice, Securities and Exchange Commission and Financial Regulatory Agency are all examining the venture, looking at things such as trading activity and communications between the SPAC and Trump’s business. Meanwhile, the SPAC, which fired its chief executive last month, only has until September 8 to complete the merger. Further complicating matters, Elon Musk bought Twitter in October, and promptly reversed the ban on Trump and other right-wing figures. That undermined the case that the world needed a more conservative version of Twitter. Today, shares of Trump’s SPAC are 92% off their highs, trading at $14 apiece, a level that suggests the former president’s business is worth $1.2 billion.

That still seems absurdly high. The fundamental problem is that barely anyone uses Truth Social. Before it launched, an investor presentation suggested the app would attract 81 million users by 2026. Now, over a year after going live, it has only an estimated 5 million. Given that Trump owns roughly 85% of the business and Twitter is worth an estima­ted $42 per user, the former president’s stake probably adds up to about $180 million today. The drop helped push him 205 spots lower on the 2023 World’s Billionaires list, to No. 1,217.

Even that might be too high. Truth Social is adding an estimated 100,000 users per month. If people continue to join at the current pace—and assuming that no one quits or dies—Truth Social will not hit its projected 81 million users until 2086. By that point, Trump would be 140 years old. A more likely outcome: Truth Social will join Trump Steaks, Trump University and in the graveyard of failed Trump ventures.

Forbes Magazine

The bottom line on Trump shows he has generated far more flops than successes while claiming he is “the greatest business success in America.” His flops included multiple bankruptcies of casinos, a failed, and fined, “Trump University,” which was nothing but a promoted scam, the long-defunct Trump Shuttle, and his hyped Trump International Hotel in Washington, where Trump lost at least $100 million even with heavy use by foreign nations seeking favors while he was president and the Republican Party, who paid inflated prices for rooms and meetings. Is now The Washington Waldorf Astoria after purchase by Hilton Hotels.

Trump has been sued hundreds of times by vendors who say he failed to pay for their services, many of them forced to seek bankruptcy and used the U.S. Treasury as his personal ATM to try and cover his massive debts while in office.

Donald J. Trump: A failure in business, a con artist who loots and pillages, a criminally-indicted defendant charged with cheating taxpayers and facing more indictments in the coming weeks, and, still, a candidate for president who poses a real threat to democracy and America.

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