The CNBC article (May 24), “Truth Social struggles to grow its U.S. user base, new data on Trump Media app shows,” explains well the factual concerns about Truth Social. Truth Social is the key driver of Trump Media’s financial status, so the serious issues outlined by CNBC represent serious risks to Trump Media shareholders.
As CNBC explains, “The user and engagement data from Similarweb and two other data firms, collected and analyzed exclusively for CNBC, offer a glimpse into how Trump Media’s flagship product is developing.”
In the article, CNBC addresses three primary questions for investors.
First, how well is Truth Social performing?
CNBC discusses the data recently released by measurement firms. For Truth Social, usage (number of users, amount of interactions, and time spent on the site) has generally declined. The one growth spurt accompanied Trump Media’s merger, but that rise has now reversed.
Second, how does management view Truth Social’s results?
When CNBC asked Trump Media about their view of the data and what steps they would be taking, it received these responses:
Regarding the data, they said they don’t collect it or use it.
Following up, “CNBC reached out to Trump Media for comment on the firms’ findings, and asked if it could provide any data of its own. ‘Why would we comment on a fake news network [meaning CNBC] reporting on fake analyses [by three professional, website data firms]?’ the company said through a spokesperson.”
Note: Those responses (not tracking and analyzing key data, viewing investor-friendly CNBC as a “fake news network”, and labelling the data firms’ results as “fake analyses”) are revealing. They mean management lacks the business and communication skills necessary to create a profitable, growing company.
Third, how will Wall Street analysts evaluate Trump Media?
That’s easy: Not well. From CNBC: “The data firms’ findings could also harden Wall Street analysts’ view of the company as a ‘meme stock’ whose sky-high market capitalization is untethered to its business fundamentals.”
So, what’s a Trump Media investor to do?
The bottom line: Get out
Running a business successfully is hard work, especially when there are large, established, successful competitors. Trump Media management is showing itself to be unable to do so. Therefore, the best course is to sell and reinvest in a well-run company.
Read the full article here
