In the world of high-stakes media and technology investments, few voices carry as much weight as that of Barry Diller, the IAC chairman known for his candid insights and successful business ventures. Recently, Diller turned his attention to Trump Media and Technology Group (TMTG), the parent company of Truth Social, and his verdict was unambiguous: “It’s a scam,” he declared, casting a shadow of doubt over the company’s financial viability and future prospects.
Diller’s critique came on the heels of TMTG’s public debut, which initially saw a surge in stock prices, capturing the attention of retail investors and the meme stock community. However, the initial excitement was short-lived, as the company’s shares plummeted, reflecting the skepticism of more discerning investors.
During a recent appearance on CNBC’s Squawk Box, Diller was unapologetically candid when discussing TMTG’s financial standing. According to an SEC filing, the company reported a mere $4.1 million in revenue while grappling with staggering losses totaling $58 million in 2023. Diller openly questioned the rationale of anyone considering TMTG a prudent investment, emphasizing that “The company has no revenue.” This underscored the glaring disparity between the company’s market performance and its actual financial well-being.
Diller’s remarks strike a chord with those monitoring the tumultuous trajectory of TMTG’s stock. Initially trading under the symbol DJT, the company’s shares surged to over $79 on the first day of trading, only to experience a significant decline by week’s end. This erratic market behavior has not escaped the attention of short-sellers, who, as reported by The New York Times, are wagering millions against the company.
The skepticism surrounding TMTG extends beyond its financial metrics. Diller also cast doubt on the limited growth prospects of Truth Social, casting uncertainty on the platform’s enduring appeal. Highlighting the significant draw of Donald Trump’s involvement in the platform, Diller argued that the former president’s current relevance is closely tied to his political activities, suggesting that the platform’s success may be short-lived.
Despite the criticism, Trump has staunchly defended his platform, asserting its “very solid” standing and emphasizing its financial position with “ZERO DEBT” and substantial cash reserves. In response to negative reactions from Trump’s detractors, TMTG, in a statement to The Hill, expressed no surprise, maintaining its commitment to not stifle political expression.
The controversy surrounding the company’s market performance is not the only issue at hand. Trump is also entangled in a legal dispute with co-founders of his social media company over ownership stakes in TMTG. The co-founders, former contestants on Trump’s reality TV show The Apprentice, allege that they were promised shares for their role in launching the company, a promise they claim has not been upheld.
As the legal and financial dramas unfold, Diller’s assessment of TMTG as a “scam” and its investors as “dopes” continues to echo through the investment community. With Trump Media’s future uncertain and its financials under scrutiny, the market’s response to Diller’s blunt appraisal remains to be seen.
The saga of Trump Media and Technology Group serves as a cautionary tale for investors and a reminder that not all that glitters in the stock market is gold. As the company navigates through legal challenges and market skepticism, the wisdom of Barry Diller’s words may prove to be an invaluable guide for those looking to invest wisely in the tumultuous world of media and technology.
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