Is Donald Trump's latest business venture heading for "the internet graveyard"? As the former president's social network releases its first public filings, read on to discover why it might be hitting the rocks – and what could happen next.
All dollar amounts in US dollars.
In January 2021, Donald Trump announced he was setting up his own social network "to stand up to the tyranny of Big Tech" following his high-profile suspension from Twitter (now X), which has since been reversed. To do this, he co-founded the Trump Media & Technology Group (TMTG). The Washington Post has reported that Trump received "90% of the company's shares in exchange for the use of his name and some minor involvement" in the business, which launched its first project – the hotly anticipated social network Truth Social – on Presidents' Day (the third Monday of February) in 2022.
The company may have launched just one project so far, but it has grand ambitions. According to TMTG's corporate website, the firm is "building the future of media and technology" and ultimately hopes to compete with brands such as Netflix, Disney, CNN, and even Amazon Web Services (AWS). However, the brand has been plagued with problems from the start...
TMTG has been under investigation by the US Securities and Exchange Commission (SEC) since October 2021, when the SEC launched an investigation into its merger with Digital World Acquisition Corp. Digital World is a special-purpose acquisition company, or SPAC: a business set up for the sole purpose of acquiring other firms.
The SEC is reportedly investigating the way the two companies communicated before announcing their deal, and has requested information about Digital World's stock trading and its communications with Trump's firm, according to CNBC. Former company executive Will Wilkerson, who filed a whistleblower complaint against TMTG in August 2022, has told the SEC that fundraising efforts via Digital World did indeed rely on "fraudulent misrepresentation... in violation of federal securities law."
While 90% of TMTG shares are held by Trump, the majority of Digital World shares are owned by small investors, according to The New York Times. Research quoted in Russia Today revealed that shares in the merger company were trading at $73.12 (£60) on 24 January 2022, making it the best-performing SPAC in history at the time of its IPO. They later peaked at $97 (£78) in March that year.
The Digital World share price has since plummeted, with the ongoing SEC investigation causing a mass exodus of institutional investors late in 2022. And another red flag was the fact that Digital World changed its address to a mailbox at a UPS store.
The merger deadline was extended to 8 September this year, meaning the companies have until Friday to finalize the deal or Digital World will have to return $300 million (£241m) to investors. A successful deal would provide TMTG with access to billions of dollars in financing – but Trump, who has remained quiet about the upcoming vote, is apparently prepared to finance TMTG himself if the merger falls through. In a Truth Social post in September 2022, the former POTUS wrote: "Who knows? In any event, I don’t need financing, ‘I’m really rich!’ Private company anyone???"
With $138 million (£111m) of private investment already withdrawn from Digital World amid the controversy, not to mention Trump's highly anticipated return to X (though he's only posted once so far), Forbes might have to re-evaluate its April 2022 claim that the network boosted Trump's net worth by $430 million (£346m). Trump himself has estimated the company is worth between $5 million (£4m) and $25 million (£20m) – but the venture has reportedly netted him just $201 (£162) since it became operational.
The company hit headlines again in May this year when it filed a $3.78 billion (£3bn) lawsuit against the Washington Post, alleging the publication defamed the business by publishing "an egregious hit piece that falsely accused TMTG of securities fraud and other wrongdoing." Digital World has now reached an $18 million (£14.5m) settlement agreement with the SEC, a deal the company said will "remove the cloud of uncertainty lingering over DWAC and would allow DWAC to move forward in achieving its objective of delivering a strategic merger."
But the company isn't out of the woods just yet. According to new federal filings – the first from Truth Social that have been publicly released – the network has made just $3.7 million (£2.9m) in revenue since launching, while losing a staggering $73 million (£58.7m). The losses are so significant that DWAC management "has substantial doubt that TMTG will have sufficient funds to meet its liabilities as they fall due... TMTG believes that it may be difficult to raise additional funds through traditional financing sources in the absence of material progress toward completing its merger with Digital World."
With rumours swirling that Truth Social might not survive much longer, read on to discover Donald Trump's other major business disasters over the years...
Aged just 24, Trump attempted to break into the Manhattan entertainment elite by investing $70,000 (£29k) to bag a co-producer’s position on the Broadway comedy Paris Is Out! It was an unlikely move at the start of a career in property. Despite good reviews, the play closed after just 96 performances.
Trump had started building his Atlantic City casino empire by borrowing money at high interest rates, and when he opened another casino and started pouring money into the new Trump Taj Mahal rather than existing casinos such as Trump Plaza, the debt began to balloon. Just one year later Trump was $3 billion (£1.6bn) in debt, and ended up in the bankruptcy court for his Taj Mahal, Trump Marina, and Trump Plaza casinos. Four years later, having reorganised the casino holding company, Trump Entertainment Resorts missed another interest payment on a $53.1 million (£33.5m) bond, and had to declare bankruptcy again. But that wasn't the end of it...
In 2009, Trump Entertainment Resorts filed for Chapter 11 bankruptcy following the Great Recession. Then in 2014 the Resorts holding company was forced to file for bankruptcy again, which saw the closure of Trump Plaza, as well as the departure of Trump and his daughter Ivanka from the company's board. The company finally emerged from bankruptcy in 2016, and billionaire Carl Icahn's Icahn International company took over Trump's old Atlantic City properties, including the Taj Mahal, and the closed Trump Plaza. But even though he tried to have his name removed from the casinos, Trump doesn't see all of his work in Atlantic City as a failure. In fact, in a 2016 interview with The New York Times he boasted about the "growth" the city gave him, and how "the money [he] took out of there was incredible". Perhaps success is a question of perspective...
It seems that 1989 was not Trump’s year, with another fortune lost on a failed business venture: the Trump Shuttle. In an attempt to have his own slice of luxury air travel, Trump secured a $245 million (£150m) loan to buy air carrier Eastern Air Shuttle for $365 million (£224m). Within two years, and after a very expensive rebrand and upgrade, he was unable to make his $1.1 million (£630k) loan interest payments and the company lost $128 million (£73m).
When launching his mortgage business at the height of the housing market boom, Trump boasted to CNBC: “Who knows more about financing than me?” Yet the man Trump selected to run the business had worked on Wall Street as a registered broker for only six days. Trump’s anticipated first-year profits of $3 billion (£1.6bn) was quickly revised to $1 billion (£535m). With outstanding debts of $298,274 (£146,150) to a former employee and $3,555 (£1,745) owed in unpaid taxes, the entire enterprise was out of business by September 2007 as the housing market headed south.
Unfortunately for Trump, 2006 was about to become one of his worst years in business. The complete failure of his first attempt at running a publication, Trump World, should have served as a warning of things to come. But ever the optimist, Trump re-launched the magazine as Trump in 2006, attempting to advertise luxury living even as the global financial crisis took hold. With $7.3 million (£4.6m) in debt, the magazine had folded entirely by 2009.
Next up he decided to launch a line of steaks. Strange move? Not when you consider that his beef was sourced from Buckhead Beef, to whom he owed $715,240 (£350k) after his Atlantic City properties filed for bankruptcy. Sales were abysmal and the company was discontinued, as was the Trump Steakhouse in Las Vegas due to 51 health code violations.
Trump's flagship hotel is located in the Old Post Office in Washington DC, bought by the former president in 2012. It was a controversial move. According to sources quoted by Buzzfeed, Trump won the contract by promising to employ an architect who championed the historic building's restoration – a promise he swiftly reneged on. The construction of the hotel cost $170 million (£126.5m) and it's bled money ever since, with reports that it lost $70 million (£52m) during Trump's presidency. In 2021, the Trump Organization announced that it would be selling the building for $375 million (£279m) to CGI Merchant Group. The deal came amid an investigation into Trump's leasing of the hotel from the federal government, which critics have described as a conflict of interest given his ongoing presidential campaign at the time.
A new "communications" website Trump launched last year permanently shut down after less than a month. Following his permanent ban from Twitter and suspension from other platforms such as Facebook in early January 2021 after he was accused of inciting violence at the Capitol, Trump revealed his newsfeed-style blog – called From the Desk of Donald J. Trump – on donaldjtrump.com in early May as a "space to speak freely and safely". The website's closure came at the same time Facebook extended Trump's suspension from its platform for two years. There were reports that the blog had low traffic, which Trump called "wrong". He told his Desk followers to "stay tuned" for his new "platform", which has turned out to be new social network Truth Social.
Now take a look at the products and brands Donald Trump loves