Former President Donald Trump hit the jackpot this spring when his social media company finally went public.
Despite generating minimal revenue, investors have given Trump Media & Technology Group (DJT) a staggering valuation exceeding $9 billion. Trump's significant stake in Trump Media is now valued at nearly $6 billion. However, new data reveals that its flagship product, the conservative-friendly social network Truth Social, remains a small player in the industry and is shrinking.
In April, Truth Social's average daily active users on iOS and Android in the US dropped by 19% year over year to about 113,000, according to exclusive data shared with CNN from Similarweb, a data intelligence company. The data for the first 29 days of April also showed a 4% month-over-month decrease in users, despite the high-profile Trump criminal trial and the growing focus on the US presidential election.
This decline poses a challenge for Truth Social and for Trump himself, who not only holds the largest share in Trump Media but also serves as its chairman and is the platform's most popular user. User growth is crucial for any social media startup, as it drives revenue through ads. Trump Media's own filings caution that a failure to increase users would harm its business prospects.
While other social media platforms are also grappling with user growth and profitability, Truth Social's decline surpasses that of most rivals. This downward trend contrasts with the success of Musk's X (formerly Twitter) and Meta's Threads, which have seen growth in their user bases.
Despite these challenges, Truth Social's valuation remains high. Trump's recent acquisition of additional shares, bringing his total stake to $5.6 billion, adds to the complexity of the company's valuation. The stock's volatile performance since going public has led to a diluted market valuation of $9.4 billion.
Some argue that Trump Media is not a typical social media stock, suggesting that traditional metrics like user growth and revenue may not be as critical. However, the long-term viability of the company will likely depend on its ability to attract and retain users in a competitive market.