Donald Trump biographer issues stark warning to Truth Social investors


Donald Trump’s biographer has warned investors in Trump’s social media platform Truth Social that their stocks are “not at all valuable” and could “be wiped out.”

Speaking on MSNBC, David Cay Johnston, a Pulitzer Prize-winning investigative journalist and author of the bestselling biography The Making of Donald Trump, commented following a series of negative reports about the company’s share value.

Truth Social launched in February 2022, about a year after the former president was banned from X (formerly Twitter) and Facebook for posts about the January 6 riots at the U.S. Capitol. While he has since been reinstated to the platforms, he opts to use Truth Social. The app has lower numbers of active users in comparison to Reddit and X, which have been around for longer.

Since shareholders of Digital World Acquisition Corp., an existing shell company, agreed to merge with Truth Social’s parent company Trump Media & Technology Group (TMTG) earlier this year—clearing the way for the former president’s company to go public—its stock value has declined.

A smartphone screen displays Donald Trump’s Truth Social app. David Cay Johnston told investors that shares in Truth Social were “not at all valuable.”

Photo by Anna Barclay/Getty Images

TMTG reported a net loss of $327.6 million for the first quarter of 2024. This loss was primarily attributed to non-cash expenses related to the company’s recent merger with Digital World Acquisition Corp., a special purpose acquisition company. TMTG posted a net loss of $210,300 the year before.

When asked about this by an MSNBC host, Johnston said the stock was “not at all valuable.”

“And the people who own it at the current price, if they don’t sell out, will eventually be wiped out,” he said. “The 300-plus million is not a cash charge, but even so, the company is losing money hand over fist and its revenues are barely in the millions of dollars.

“So there’s no support here for a company worth four, five, six, at one point $8 billion. This is all fans of Donald Trump and others hoping to exploit the company and in some cases to sell it short so they can collect when the price falls to near zero.”

Newsweek contacted TMTG by email outside of business hours to comment on this story.

A regulatory filing to the Securities and Exchange Commission in April revealed that Truth Social made just over $4.1 million in revenue in its last operating year, but racked up $58.2 million in costs. It showed an operating loss of almost $16 million.

On May 26, Google Finance data showed the value of each share at $45.91. This is a marked increase compared to April 17, when it hit a low of $22.84, but down 9.38 percent in the last five days. It is also less than the value when it debuted on the stock market and closed its first day of trading at $57.99.

Writing for Forbes in April, John S. Tobey, who has worked in the investment industry for more than 30 years, issued a similar warning and said that while the value of the stock may increase, investors could risk losing out if the shares devalue further.

Tobey said people should “not wait” to sell their shares.

“Investing successfully means running for cover when the floodgates open,” he wrote. “Waiting to see if floodwaters really are coming means getting swept downstream.

“Wall Street is filled with successful investors who ‘sold too soon.’ After all, you can always buy back if the waters recede. Or, more likely, you just go in another direction where the sun is shining on dry land.”

On April 29, TMTG issued a press release highlighting steps shareholders could take to prevent brokerage firms lending their shares for the purpose of short selling. The release also included a sample email shareholders could send to brokers to opt-out of securities lending programs.

A TMTG spokesperson told Newsweek at the time: “We will take whatever actions are necessary to prevent our retail investors from being exploited.”