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MAGA Suckers Are About To Lose Big Money On Truth Social

MAGA Suckers Are About To Lose Big Money On Truth Social

Like everything else related to Donald Trump, his social media platform Truth Social’s parent company, Trump Media & Technology Group, has been embroiled in a nasty stew of incompetence, greed, and legal warfare. And much of that came to a head Monday as the company lost almost 21.5 percent of its inflated valuation after its much-hyped initial public offering, or IPO.

Despite the one-day collapse, the stock is still grossly overpriced, and a close examination of TMTG’s 8-K filing with the Securities and Exchange Commission shows just how much of a disaster it is—and how much further the stock could plunge. Let’s take a walk through the document.

  • Trump holds 57.3 percent of the company, valued at $8.84 billion as I write this. That means his stake is worth $5 billion. But … that’s just Monopoly money. If he tried to sell, the mass flooding of his shares into a market uninterested in hoovering them up would collapse the price. If he tried to sell, his eventual take would be substantial, but we don’t know what his holdings are really worth. At the moment, he’s forbidden from selling his TMTG shares for six months, though the company’s board (which he controls—more details below) could waive that provision. If they did, it would immediately collapse the share price. If they don’t and Trump has to wait, expect the price to fall in fits and starts over the coming months, because the rest of the 8-K had nothing but horrendous news for the company. As a fun aside, Trump lost around $1.2 billion in paper value today.

  • Since Trump owns more than 50 percent, the filing notes that “a company of which more than 50 percent of the voting power for the election of directors is held by an individual, group or other company is a ‘controlled company’ and may elect not to comply with certain corporate governance standards.” The filing helpfully explains what this means: “Accordingly, investors may not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.” Who wants to invest in a company that has fewer stockholder protections, and is owned by Trump? Oh, and seated on that not-independent board? Donald Trump Jr. and Linda McMahon, who ran for Senate in Connecticut twice (and lost).
  • Conservative former Congressman Devin Nunes is paid $750,000 as CEO, despite having zero experience running a tech or media company, and that will go up to $1 million next year. Prior to serving in Congress, he was a farmer. Now, I’m sure you’re thinking, “Gosh, that’s not a lot of money, and there’s no one more qualified at licking Trump’s boots than Nunes. What if he bolts?” Oh ye of little faith, you underestimate Trump’s grifting negotiating prowess! Nunes is also getting a $600,000 “retention bonus”! Keep that number in mind.
  • The company’s chief financial officer Phillip Juhan and chief operating officer Andrew Northwall are getting $337,500 and $365,000, respectively. And you’ll be happy to learn that both of them are also getting $600,000 retention bonuses.
  • So just to be clear, TMTG’s top three officers are making $3.252 million this year. Therefore, we can assume that the company’s revenues are commensurate with such compensation, right?
  • Kash Patel gets $120,000 annually in “consulting” fees, as does Dan Scavino. You might remember Patel as the insurrectionist who Trump attempted to install at the CIA at the last minute. These days, he’s threatening to jail the media if Trump wins in November. Scavino was the longest-tenured member of the Trump administration, ending as Trump’s director of social media, which tells you how effective he was at sucking up to Trump—and how tolerant he was of Trump’s fascism. In fact, former Trump lawyer Jenna Ellis testified that when she told Scavino that Trump had to leave office, he told her, “We don’t care [...] The boss is not going to leave under any circumstances. We are just going to stay in power.” So why do you think two of Trump’s top insurrectionist lieutenants are collecting cushy “consulting” fees from the company?
  • Upon the IPO’s closing, the company took out a $50 million loan at eight percent interest, payable in one year. I’m no expert on this, so I could be wrong, but what I always see post-IPO is that a company will sell a certain percentage of shares to fund whatever expansion/operations are needed. Elon Musk did this effectively at Tesla: Every time the stock price spiked, the company would sell extra shares to raise the money the company needed for its next expansion. The only reasons I can see for TMTG to take out a loan is that 1) it doesn’t dilute Trump’s equity stake, keeping him above 50 percent and that magical “we don’t need to follow the rules” level, and 2) they can declare bankruptcy and never pay it back.
  • Trump Media reported losing $58.2 million on just $4.1 million in revenue in 2023. The bulk of that massive loss comes from $39.4 million in interest expenses. In 2022, the company had a $50.5-million profit on revenue of $1.47 million. And no, I don’t know how you claim a $50 million profit with revenues below $2 million. Maybe they’re counting loans as profit? The 8-K report states, “To date, TMTG has relied primarily on bridge financing, in the form of convertible promissory notes, to build the Truth Social platform.” I count 20 loans totaling $41.7 million, which the company is now paying off (again, rather than using proceeds from the IPO to raise money for the company).
  • Remember, TMTG paid its top three executives $3.252 million for their amazing ability to generate … $4.1 million in revenue. Thank God they granted those generous retention bonuses to keep them around!
  • Uh oh, Elon Musk—they’re coming for your schtick: “TMTG has conducted extensive technological due diligence regarding, and has begun testing, a particular, state-of-the-art technology that supports video streaming and provides a ‘home’ for cancelled content creators, and which TMTG aims to acquire and incorporate into its product offerings and/or services as soon as practicable.”
  • This is just delicious: “TMTG’s success depends in part on the popularity of our brand and the reputation and popularity of President Trump. The value of TMTG’s brand may diminish if the popularity of President Trump were to suffer [...] President Trump is involved in numerous lawsuits and other matters that could damage his reputation. Additionally, TMTG’s business plan relies on President Trump bringing his former social media followers to TMTG’s platform. In the event any of these, or other events, cause his followers to lose interest in his messages, the number of users of our platform could decline or not grow as we have assumed.” The company is literally admitting that its entire business revolves around Donald Trump and his “reputation.” Anyone who puts a dime into this dumpster fire deserves to lose all their money.
  • The filing doesn’t sound all that optimistic: “TMTG expects to continue to incur operating losses and negative cash flows from operating activities for the foreseeable future, as it works to expand its user base, attracting more platform partners and advertisers.” So what is the company doing to attract more users and advertisers? “This growth is expected to come from the overall appeal of the Truth Social Platform.” Ahh, the “vibes” approach to company-building. There is nothing wrong with losing money in order to grow. Most growing businesses do that at some point. But they also don’t go public with a measly $4.1 million in revenue. The norm for Wall Street IPOs is $100 million in revenue and significant year-over-year growth. The idea that a company that has one-third of the revenue of Daily Kos is worth nearly $9 billion is the height of absurdity. And most people know this, which is why this is destined to be a penny stock.
  • This is hilarious: “Since its inception, TMTG has focused on developing Truth Social by enhancing features and user interface rather than relying on traditional performance metrics like average revenue per user, ad impressions and pricing, or active user accounts, including monthly and daily active users.” They don’t report those numbers because they are laughable. They add, “TMTG believes that focusing on these KPIs [key performance indicators] might not align with the best interests of TMTG or its shareholders.” Exactly! If people knew just how pathetic their metrics were, the company’s shareholders would be wiped out overnight.

Now remember, the bulk of TMTG’s expenses are those loans, and it didn’t sell any extra shares to pay them off. So to close this recap, let me quote one more line that perfectly encapsulates the inevitable fate of this company:

[M]anagement had substantial doubt that TMTG will have sufficient funds to meet its liabilities as they fall due.

“Truth,” indeed.

Reprinted with permission from Daily Kos.

Weekend Reader: ‘Political Mercenaries: The Inside Story Of How Fundraisers Allowed Billionaires To Take Over Politics’

Weekend Reader: ‘Political Mercenaries: The Inside Story Of How Fundraisers Allowed Billionaires To Take Over Politics’

Political fundraising has completely transformed our electoral process. As Lindsay Mark Lewis and Jim Arkedis explain in their new book, Political Mercenaries, the majority of money in politics comes not from ordinary voters, but from a select group of millionaires and billionaires with hefty financial stakes in the business of government — and far less interest in the greater good.

Sadly, there are no easy solutions. The excerpt below addresses the inevitability of wealthy donors and why the influence of money in elections will only get worse from here.  

You can purchase the book here.

I walked into Dick Gephardt’s fundraising machine in June of 1992. I walked out of the Democratic National Committee as a departing national finance director in late 2005. In all those years, I watched the part-time fundraising required to run for Congress move to a full-time occupation. I watched campaigns for Congress go from costing well under $500,000 to $1.5 million, and often much more. I’ve raised—or helped raise—over $200 million myself. I watched the grassroots donors on both sides of the partisan aisle create a new need for partisan warfare. Most important, I helped a few wealthy individuals with narrow concerns hijack the Democratic Party, demanding the attention of its politicians and altering its agenda.

After all those years and dollars, I’ve constantly asked myself how to limit the role of money in politics. Good government reformers have offered a slew of answers.

Should Congress write a law banning lobbyists from contributing? The John Roberts Supreme Court — as it did again with McCutcheon v. FEC, just days before I wrote this — will kindly remind you about defending free speech and that contributing political money does not equal bribery.

Should we limit contributions to, say, $100? That sounds all nice and clean, except you will put all the power in the hands of the big employers and big membership groups, like large companies and unions. Employ 100,000 people, and you can ask them in their “free time” to contribute $100 to a political action committee because a certain member of Congress is just so damn good for America. Get just five hundred to pony up and you have produced a hefty $50,000, enough to give the maximum to five members. Do that a few more times, and your company could run a House committee that controls legislation that pertains to your business. But if you employ just fifty people? Good luck.

And good luck getting Congress to write either law.

Maybe we need a constitutional amendment limiting political money? Good luck there too. The process is so daunting — two-thirds majorities in both the House and Senate or two-thirds of state legislatures — that it’s just a pipe dream.

Rather than worrying about limiting money, focus on the other aspect: time. Time is money, right? If you can’t control the money, then control the time.

Consider the options a member of Congress has to raise money: from lobbyists, corporate and union political action committees, national rich donor networks, grassroots online donations, and super-PACs supporting them. Raising money from each is time consuming in its own way.

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Raising money from the lobbyist and PAC community might be more transactional — politicians take a check and might be lobbied — but it’s time consuming, as members must attend fundraising events every night. It’s certainly out of control, but not for the reasons most people think. Lobbyists aren’t buying votes; the relationship is the exact opposite most of the time. Members of Congress have become adept at figuring out the campaign value of proposed legislation. They don’t talk about it, and they certainly don’t mention it back home.

Proposing damaging legislation puts fear into industry leaders. It’s the most sure-fire way to raise money. These bills don’t get very far in the legislative process. That’s because lobbyists rush to cut checks to every member on the relevant committee. The press, President Obama, the general public all reverse blame by holding out lobbyists as the evil actors in this process.

They are wrong. Raising money off damaging legislation has become basic economics. Congressional committees with fundraising potential have grown in size over the past twenty years. Congress is the same size, of course, but the number of members who sit on the Ways and Means Committee, Financial Services Committee, and Appropriations Committee has increased dramatically. Why? Because they can raise money by serving on committees. A member of Congress can vote on a bill, then walk down the street to a fundraiser and collect a check related to the vote. Members couldn’t do that if there was a time-based restriction on raising money when Congress was in session.

What about those wealthy donor networks around the country? The problem is time spent coddling them. Raising money from a rich billionaire is not as simple as picking up the phone and asking for a contribution. That just doesn’t work. Members of Congress call these people, travel around the country to see them, and take weekend trips with them. They do a lot with a very few select individuals who can write big checks and bundle checks from others.

The time members spend with these people gives them leverage. It is no longer about one wealthy person helping a candidate because the donor believes in the candidate. This relationship has been reversed as well. Now members of Congress believe they need these wealthy donors. Members believe they need to know donors, they need to care about what they care about, they need to be a champion of the donors’ priorities.

SuperPACs play mostly at the presidential level, just as I saw starting with the Howard Dean campaign in 2004 and as the country has seen since in the 2012 election. They play the outsider game and change the party’s agenda to fit the needs of their patrons. There are fewer SuperPACs focused on congressional races, and most of the SuperPAC money for congressional campaigns is raised by a few members of each party’s leadership, which, of course, takes time, and plays into the hands of elite billionaires controlling the party’s agenda in an unaccountable fashion.

Why not try to raise exclusively from the grassroots? That shouldn’t take much time, right?

The idea had so much potential. The basic concept of millions of people giving to the cause because they believe in something was what kept me going in my dark days. It was the holy grail of clean elections. Except that it wasn’t. In order to raise grassroots money on the large scale, you have only one choice: scare people, be obnoxious, throw bombs. And that takes time too.

If you enjoyed this excerpt, purchase the full book here.

From Political Mercenaries by Lindsay Mark Lewis with Jim Arkedis. Copyright © 2014 by the authors and reprinted by permission of Palgrave Macmillan, a division of St. Martin’s Press, LLC.

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Tea Party Groups Raise Huge Sums Of Money For Next Election Cycle

Most people are well aware that the allegedly grassroots tea party movement has significant backing from big money. But how much will the tea partiers be able to influence upcoming elections? Based on recently released financial reports for some of the largest tea party-affiliated groups, a whole lot. Politico reports:

The groups — Americans for Prosperity, FreedomWorks, Club for Growth, Leadership Institute and Tea Party Express — raised $79 million last year. That’s a 61 percent increase from their haul in 2009, when the tea party first started gaining traction, and an 88 percent increase over their tally in 2008, according to a POLITICO review of campaign reports and newly released tax filings.

And the two biggest groups — Americans for Prosperity and FreedomWorks — tell POLITICO they’re planning to raise and spend a whopping $156 million combined this year and next, laying the groundwork for what could be a massive tea party organizing push against Democrats and the occasional moderate Republican in 2012.

While local tea party affiliates are still relatively small grassroots efforts, the profitability of the large, national groups shows that the extreme right wing will no doubt play a role in upcoming elections. In some states, like North Carolina, Democratic candidates are already struggling against the tea party’s massive money machine, thanks to contributions from wealthy conservatives. And, unsurprisingly, electoral evidence shows that the large sums of campaign cash often yield success.

As tea party groups continue to fill their coffers, the impact on elections will certainly not be minimal.