The Truth of Truth Social

It Always Was Nothing But Another Trump Scam

Donald Trump is many things. He’s a former President. He’s a game show host. He’s a carnival barker sideshow. He’s a convicted felon. He’s a cheat and liar.

But foremost, he is a businessman. He understands how to make a buck. He’s a marketer who likes to get paid by putting his name on things. Trump Steaks. Trump Tower. Trump Vodka. Trump The Board Game. He’s built a lifetime brand on his name that evokes a certain level of wealth, campiness, hollow promises and eventually empty pocketbooks. His biggest product has always been himself. His biggest success has always been persuading people he is worth something.

Where Trump made most of his money was in Real Estate. Basically, he buys real estate, fixes it up (often screwing over vendors and worksmen), puts his name on it and then inflates the value of how much it is worth. At the same time, for tax and insurance purposes, he undervalues the same properties to avoid having to pay higher taxes or premiums. To Trump, this is a chance for arbitrage, making money on the differences in value. It is also against the law and fraudulent, for which Trump was found guilty.

Which brings us to Truth Social. Donald Trump LOVED Twitter. He was addicted to it worse than many a high school senior and had grown his following on the platform to over 88 million, making him one of the most watched accounts on it ever. Always had to rant and rave and give us his unbridled opinion about everything. I’ve never seen a guy sound more like an angry, cranky old man than reading the feed of Donald J. Trump on Twitter. So it was fortuitous that in the aftermath of 1/6, the sensible minds that was the board members of Twitter banned Trump from the platform. They had previously warned him that his pattern of behavior consistently violated platform policies and that he was facing a ban. After 1/6, they permanantly suspended his account.

So what’s a wannabe dictator to do without his microphone and soapbox? Create his OWN microphone and soapbox of course. And thus, “Truth Social” was born. From the onset, it was basically just a cheap Twitter clone for people wanting to hear Trump. There really was no other reason to go on it. After Elon Musk purchased Twitter and ripped it to pieces, many more fled to sites like Mastadon, Bluesky or Threads, and the conservative MAGA crowd, they flocked to Truth Social.¹ But you see, having his own social media company wasn’t enough for Don, he needed to monetize it. So work began almost immediately on an IPO offering stock in the company.

The dirty little not-so secret of Silicon Valley is that most social media sites don’t make money. There’s only a limited number of ways they can be free and encourage engagement, while also making money. The most common ways are either through ads or selling user data to marketing firms. Even then, its a risky proposition; Twitter never turned a profit through its years as one of the largest social media brands on the planet. However, Truth Social had Donald Trump’s BRAND. He was the likely Presidential Nominee again for the Republican Party, and hence, this would be a backend way at least to fund Trump, give him free publicity and direct public access (through the social media site) and provide a rally site for the converted.

Going public in March, the stock immediately surged to a high of $78 per share, purely on the strength of Trump’s brand. It’s easy to say that because there are very little other assets the company actually owns, and has yet to demonstrate any method for generating revenue. After it’s peak, the stock slid down to the $40 range. After the initial blackout period closed, Trump was then entitled to another $1.8 billion in stock from the company, boosting his net worth. Trump now owns 114.75 million shares of DJT (Truth Social’s trading symbol) out of 197 million shares outstanding. He owns 65% of the company. The company however is still in the red, and made only $4 million revenue last year. Like all of Trump’s scams, this seems like a shiny facade backed by crap.

Which brings me to where the stock is today. In the past month, as his Presidential Campaign falters and looks more and more like he will not be the next President, the stock has been crashing losing 35% of its value. It lost 5% of its value on Monday alone (the day of the interview) and has continued to fall since.

But part of the reason was that Truth Social also had to report earnings on Monday, and how did it do? It lost $16 million while generating a pathetic $837k in revenue last quarter. How does that look compared to previously? In the first quarter this year it lost $300 million; DJT could just stand for “Down the Joker’s Toilet.” It has all the qualities of a shitty meme stock, whose purchasers just want to stick it to Wall Street, not realizing that even Wall Street thinks this is a joke.

That means, considering Trump’s stock value, he’s lost over $1.9 billion of stock value since the start of the month (which let’s face it, was overvalued to begin with). All of his assets in this venture are purely on paper. It would not surprise me one bit if he started dumping his shares quietly trying to maintain whatever value he was given at the onset. Increasing the likelihood this venture fails was Trump this week appearing on rival Twitter/X with Elon Musk. Musk voided Trump’s ban almost right after taking control of the company, but Trump had not appeared on it until this week. ² Why? Because what remains on Twitter are largely die-hard users and conservatives, and none of them are on Truth Social, which is nothing but an information silo for the most cultish MAGA followers. The value of Truth Social is going to continue to crater until there is nothing left and he declares it bankrupt.

At which point, he’ll take it as a tax loss and avoid having to pay taxes for the rest of his life. Because that’s what Trump does. Losing money is his real business.

PurpleAmerica’s Recommended Stories

“Truth Social is Donald Trump’s Greatest Scam Yet.” By Alex Kirschner at Slate.

“Stable Genius Trump Tanks His Own Media Company After Posting On X” by Hafix Rashid at the New Republic.

PurpleAmerica’s Cultural Corner

Looking at the stock analyses of various outlets on DJT, Forbes had this to say on Monday’s stock announcement:

DJT's second quarter earnings report was a dud. Management once again chose to skip an earnings call that would have provided in-person management commentary and an all-important Q&A session with analysts for all to hear - especially nervous shareholders.

As a result, management's sole reliance was on the weak 10-Q SEC filing (2nd quarter earnings report). But it failed to provide the fundamental support and interest for shareholders and potential investors. Naturally, then, the media had only the bare bones, negative picture to announce:

Barron’s reported that the stock is wavering (that’s putting it lightly) and investors are trying to get what money they can out of the company before it tanks.

I talked to somebody about whether it would be a good stock to short. That means, you bet that the stock price goes down. You sell it today, and then buy it when the stock decreases in value completing the transaction, pocketing the difference. He said “absolutely not.” The reason being that Trump’s cult like devotees could BUY UP a lot of stock as the price decreases thinking it a good buy or wanting to stick it to negative investors; he has that kind of control on them. With shorting, there is a ceiling on how much you can make, which is that the stock goes to zero and you get the value of whatever you originally sold it at; but if the stock goes UP there is no limit to how much you can lose. On top of that, you have to pay interest, since what you are actually doing is borrowing the stock when you sell it and paying it back when you buy it; the higher it goes, the higher you have to pay, and the more the lender can charge to cover their margin, called a margin call. It’s a horrible financial position to be stuck in. During the COVID epidemic, Melvin Financial, a famed short seller of Gamestop lost BILLIONS as populist retail investors (commonly referred to on Wall Street as “dumb money”) bought up shares forcing the stock to skyrocket. Trump’s appeal and his hold over his audience dissuades short sellers from touching the stock.

Nonetheless, the volume of short selling on DJT has been increasing throughout the year, spiking within the last 2 months.

PurpleAmerica’s Obscure Fact of the Day

During his trial for fraud, Trump Organization accountant Donald Bender from MAZARS Accounting Firm admitted that the Donald J. Trump Organization had an operating loss of over a billion dollars over two years about a decade ago, and losses every year from 2009 through 2018.

PurpleAmerica’s Final Word on the Subject

As a businessman, the only business Trump seems to be good at is for bankruptcy attorneys.

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Footnotes and Fun Stuff

1. It’s funny to me how even a large number of Republicans have come around to admitting that Twitter has become a toxic atmosphere that they want no part of. The thing is that when you combine anonymity with as free as speech as possible, then the quality of that speech devolves to the worst common denominator. Just ask Frederick Brennan, creator of 8Chan.

2. The one exception to this was when he posted his mugshot on Twitter/X in an attempt to raise money.