(NEW YORK) — Shares of Trump Media & Technology Group fell more than 11% this week, suffering from poor sentiment following a weak earnings report and former President Donald Trump’s return to rival social media platform X.
The company’s problems date back to the middle of last month. Since then, parent company Truth Social’s stock price has fallen about 43 percent. But as the stock continues to slide, some investors remain unfazed, telling ABC News they are optimistic about the company’s financial prospects or are supporting it as a sign of support for Trump.
Todd Schlanger, an interior designer from West Palm Beach, told ABC News he bought shares in Trump Media because he supports Trump’s policies and believes in his companies.
“I’m a Republican, so I supported him. When I heard about the stock, I got involved because I support the company and believe in free speech,” said Schlanger, who says he owns about a thousand shares of the company.
Schlanger, a frequent user of the social media platform, boasted about the interface – “It’s like a combination of X and Facebook” – and said he looks forward to expanding the company’s streaming services.
“I think it will be as strong as Facebook or Twitter,” Schlanger said.
Other investors said they saw Truth Social primarily as an opportunity to support the former president.
“I did it more as a token to President Trump and to show my support. I didn’t really want to make a lot of money,” said Teri Lynn Roberson, who bought five shares of the company when the company reached its highest price after its IPO in March.
Roberson said she was neither concerned about the stock’s weak performance nor the impact of a possible Trump return to rival X, which could benefit Trump’s presidential campaign by expanding his following beyond Truth Social’s “echo chamber.”
“I’m completely baffled, but that’s OK with me. I’m just watching it for fun,” Roberson said.
Truth Social’s stock performance has significant financial implications for the former president, who owns a 65% stake in the company. According to Fortune, Truth Social shares make up a large portion of Trump’s total wealth.
Truth Social did not immediately respond to ABC News’ request for comment.
Truth Social’s recent losses
An earnings report released last Friday showed that Truth Social lost more than $16 million in the three months ended June. The company’s revenue was about $836,000, down 30 percent from $1.2 million a year earlier, according to the earnings report.
In a statement released following the earnings report, Truth Social CEO Devin Nunes praised the company’s balance sheet, which includes $344 million in cash and no debt.
“From the beginning, our intention was to make Truth Social an impenetrable beachhead of free speech, and we are doing just that by taking extraordinary steps to minimize our dependence on Big Tech,” Nunes said.
However, investors reacted poorly to the quarterly report when trading opened on Monday, and the stock price fell further when Trump then posted on rival X for the first time in about a year. It was only his second post on the platform since January 2021, when the company suspended Trump “due to the risk of further incitement of violence” following the Jan. 6 attack on the Capitol.
After tech billionaire Elon Musk bought the company then known as Twitter in October 2022, he lifted the ban the following month. On Monday, Musk spoke to Trump in an interview that aired on the platform.
While the former president is required by an exclusivity agreement with Trump Media & Technology Group to post personal content first on Truth Social, the agreement allows Trump to post “politically relevant” posts on other social media sites. Aside from a series of political posts on Monday, Trump has refrained from using social media sites outside of Truth Social.
Michael Rogers, owner of a masonry business in Asheville, North Carolina, said he first bought shares of Truth Social in 2022, before the company went public. Since then, Rogers has purchased more than 10,000 shares, he said.
Rogers, who plans to vote for Trump in November, bought the shares both as an expression of political support and as a sign of confidence in the company’s financial future, he said. “The reasons I started investing in Truth Social are exactly the same,” Rogers told ABC News.
Trump’s return to X this week didn’t bother Rogers because Trump can reach a larger audience through that platform, Rogers said. But last Friday’s weak earnings report worried him.
“The revenue is simply not there,” Rogers said. “The company has to work on that.”
Despite the stock’s recent difficulties, Rogers said he remains confident in the company.
“I’m in this for the long haul,” Rogers said.
Analyst outlook
Analysts described Truth Social’s performance as the typical volatility of a so-called “meme stock.” The term – made famous by pandemic-era examples like GameStop and AMC – describes a company that appeals to investors based on its ideology rather than its financial prospects.
Truth Social’s stock rose about 30 percent in the immediate aftermath of Trump’s assassination in July, reaching $40 per share. That was the stock’s highest level in over a month, but the price was still well below its peak of about $66.
The share price is now around $23, down nearly two-thirds from its peak.
Tyler Richey, an analyst at Sevens Report Research, said the stock’s decline in recent weeks coincided with Vice President Kamala Harris’s candidacy as the Democratic presidential nominee. A surge in votes for Harris in exit polls has damaged perceptions of Trump’s electoral chances, Richey told ABC News.
“The stock fluctuated depending on the sentiment toward former President Trump,” Richey said. “It doesn’t help that Trump used Truth Social almost exclusively and decided to join Elon Musk with X.”
Jay Ritter, a finance professor at the University of Florida, said Truth Social’s poor financial position makes the company vulnerable to negative news and clouds its long-term prospects.
“I’ve been saying for a long time that the stock will be volatile, but the long-term trend will be down,” Ritter said.
“If you really believe in the company’s story, you have to ask yourself, ‘Okay, where is the business strategy that is going to generate revenue?'” Ritter added, noting that for diehard Trump supporters, in contrast, it makes sense to support the stock.
“I don’t think it’s irrational for people to do things like that,” Ritter said. “On the other hand, I generally don’t do anything to line billionaires’ pockets even more.”
Trump’s supporters rushing to buy shares of Truth Social provided other investors with an opportunity to profit from the company’s turbulent stock price. With anticipation building for Trump Media & Technology Group’s merger with Digital World Acquisition Corporation in March, Mitchell Standley exercised some call options – contracts that allow an investor to buy a stock at a predetermined price – to earn a 1,500 percent return on his investment.
“It was basically just a pump-and-dump deal,” Standley told ABC News. “I knew that after the merger, all of his backers were going to pump in a lot of money and buy the company.”
Standley said he had avoided the company since March, attributing the volatile stock performance to the company’s poor fundamentals.
“I’ve earned my money and I’m staying away from it,” Standley said.
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