Former President Donald Trump’s recent return to X (formerly Twitter) has sparked significant concern among investors in his social media venture, Truth Social. The unexpected move, highlighted in a report by analyst Alex Kirshner from Slate, could have severe repercussions for the platform Trump established to rival X.
On August 13, 2024, Trump reappeared on X, marking his first post in over a year and participating in a live interview with X’s owner, Elon Musk. This development has not only surprised many but also raised alarms among Trump Media investors, who are now facing potential losses due to Trump’s actions.
Truth Social was launched by Trump as an alternative space for him to communicate freely with his followers, circumventing the restrictions he faced on X. However, Trump’s recent engagement with X threatens the very foundation of this platform. Kirshner points out that Trump’s decision to promote X could undermine investor confidence in Truth Social.
The timing of Trump’s return is especially problematic, coming just a month before a six-month lockup period on his Trump Media shares is set to expire. Following his X reappearance, Trump Media’s stock dropped by 5 percent, with the decline continuing into the following day.
Kirshner critiques Trump’s decision, noting that it demonstrates a disregard for Truth Social’s investors. He writes, “Apparently it is not good for confidence in a business when the majority owner of that business spends his time propping up a direct competitor that provided the entire basis for the owner’s copycat business.”
The financial health of Trump Media has already been under scrutiny. The company reported a $16 million loss in the second quarter of 2024, with revenue falling short of $1 million. These figures underscore the challenges Truth Social faces in gaining traction and profitability.
Kirshner argues that Truth Social was never intended to be a viable business but rather a platform for Trump to engage with his supporters in a more controlled environment. The platform’s primary asset is its association with Trump himself, which has been crucial in maintaining its $5 billion valuation.
However, Trump’s return to X disrupts this advantage. By re-engaging with X, Trump has effectively challenged the notion that Truth Social is his exclusive online domain, potentially diminishing its appeal to users and investors alike. As Trump’s political comeback continues to unfold, the fate of Truth Social and its investors remains uncertain.
