(Reuters) – Shares of Donald Trump’s social network fell more than 23% on Monday, erasing gains from its debut last week, after the company posted millions in losses and said it would struggle to meet its financial obligations in future.
Trump Media & Technology Group lost more than $58 million in 2023, the company said in a statement, sending shares reeling less than a week after parent company Truth Social went public in a high-profile, blank-check merger.
The stock rose on its March 26 debut, helped by retail buyers, including some supporters of the former president, who is again the Republican nominee in the 2024 election.
However, Monday’s message caught the attention of sellers, sending shares down $14.45, or 23%, to $47.51 on more than 14 million shares. On the first day of trading, it closed at almost $58.
“As of December 31, 2023 and 2022, management has significant doubt that TMTG will have sufficient funds to pay its obligations as they fall due, including obligations related to notes previously issued by TMTG,” the company said .
The public offering could end up providing the former president with a windfall of billions of dollars, depending on the stock’s price. Trump will own between 58% and 69% of the company, but he is not allowed to sell any of his TMTG shares for six months or borrow against them under the terms he previously agreed to.
Even with the stock falling, its market value was still $6.3 billion, compared to social media platform Reddit’s $8 billion market capitalization. The latter has 73 million active users, while Truth Social only discloses the total number of registrations, which is 8.9 million.
Truth Social had revenue of $4.13 million last year, up from $1.47 million in 2022, the company said in a filing. By comparison, Reddit’s 2023 revenue was $800 million.
Trump’s company remains embroiled in a legal battle with its co-founders Wesley Moss and Andrew Litinsky. On Monday, a Delaware judge said he wants the couple and Trump Media to set a hearing date this month to determine whether they should receive the 8.6% of the company they claim they are owed.
Trump Media and the couple filed lawsuits against each other in Delaware and Florida state courts.
The co-founders accused Trump Media of attempting to improperly dilute their stake. The company said they had failed to earn their shares and were trying to deprive them of their ownership, and wanted a judge to say they did not have the right to appoint two board members.
Trump Media said it expects to incur operating losses and negative cash flows from operations for the foreseeable future.