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Trump's Social-Media Potemkin Village – The New Yorker

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5 months ago

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Last Tuesday, the day of Truth Social’s I.P.O., under the ticker symbol DJT, the social-media company co-founded by Donald Trump reached a short-lived market capitalization of more than six billion dollars. To put things in perspective, that figure puts the platform on par with such unglamorous mid-range technology businesses as Chewy, an online pet-food purveyor, and Klaviyo, an e-mail-marketing company. But even those companies have been around for more than a decade and bring in hundreds of millions of dollars in annual revenue. Truth Social, in contrast, is notable for the gaping incongruity between its spiking valuation and the paltry reality of its product. The concept of a Trump-driven social-media platform emerged in 2021 after he was banned from Twitter and Facebook in the wake of the insurrection at the Capitol on January 6th. Truth Social launched a little more than two years ago, in February of 2022, and Trump immediately began using it as his personal megaphone. But, in the time since, according to some estimates, the app has accumulated only about a million active users. According to the company’s filing with the Securities and Exchange Commission, Truth Social lost fifty-eight million dollars last year, after generating only $4.1 million in revenue. What I found when I recently joined the site was a bit like a Republican-themed carnival, of the kind that alights in a town field and attempts to hide its shoddiness for long enough to make money without entirely falling apart.

Truth Social’s sign-up page advertises that it “encourages an open, free, and honest global conversation without discriminating on the basis of political ideology.” Its mobile apps invite you to “find Truth from home or on-the-go.” A confirmation e-mail that I received after signing up welcomed me as a “truthsayer.” The limited popularity of the site means that many usernames are still up for grabs; the sample name suggested was @LibertyForAll, but I went instead with @freedomnmyveins. This was as far as I got on Truth Social without encountering a barrage of glitches. When I clicked the button to add an avatar image, nothing happened. I settled instead for the placeholder illustration of an eagle. To kick-start my feed, the app offered me a list of recommended accounts to follow, beginning with Trump’s. But the Follow button did not actually appear where it was supposed to next to his name, so I had to search for his account later by hand. Other suggested accounts included the misogynist influencer Andrew Tate and the conspiracy theorist Jack Posobiec. Only after twenty-eight recommendations did the app offer a woman, Tulsi Gabbard, the Hawaiian congresswoman and ex-Democrat. The button for posting messages on the platform is labelled “Truth”; the sharing function, equivalent to a retweet, is a “ReTruth.” Ads are tagged with the Orwellian label “Sponsored Truth,” which might be a contradiction in terms. The majority of the ads I saw were for Trump’s Presidential campaign. A few were for MyPillow, the erstwhile Fox advertiser whose founder, Mike Lindell, is a major Trump supporter.

Truth Social’s interface was designed more or less as a clone of Twitter’s, though it is more bare-bones. Like Twitter and most other major social networks these days, it relies heavily on recommendation algorithms to populate users’ timelines. Its main For You feed offered me conspiracy theories about immigrants at the U.S. border and complaints regarding President Joe Biden’s decision to observe a Transgender Day of Visibility, which fell on the same day as Easter this year. Andrew Tate was posting memes and declaring himself “hard to kill” after his recent arrest in Romania regarding extradition to the U.K. on rape charges. (He has denied the allegations.) Finding nonpolitical content on Truth Social required digging. I discovered an account called @archaeologyart, which highlights “Archaeology, Art, Museums, Vintage Maps, Old Photos, and more,” similar to the banal curated accounts that proliferate on Twitter. But even its posts inspired vitriol: a painting of Sappho had commenters angry that the account used B.C.E. (“before the Common Era”) instead of B.C. (“before Christ”). Others took umbrage at an ancient Egyptian art work depicting manual labor, which bore a caption describing how the pharaoh’s workers periodically staged strikes. “I’m sick of seeing protests. It’s gross,” one user wrote. All social-media feeds can feel like a monotonous stream of outrage, but, befitting its founder, Truth Social has elevated the art of petty grievance to extravagant heights.

As I was scrolling through Donald Trump’s own account, I noticed a lonely voice in the comments. “Trump is a criminal and sexual predator. Lock him up!” a user named @SaberK24 had posted. I thought at first that the message was meant as a joke, but scrolling through @SaberK24’s messages quickly revealed that he seemed to be waging a one-man crusade against Truth Social’s right-wing ideologues. He (pronouns were listed in his bio, a sign that he was not from around here) was Truthing dozens of times a day, enduring insults including “dumbfuck” and “left wing asshat” along the way. I messaged him to ask if he’d talk to me about what he was hoping to accomplish on Truth Social, but he responded only with an image of Bugs Bunny mouthing the word “NO.”

Plenty of people use X, the site formerly known as Twitter, the way @SaberK24 apparently uses Truth Social, not in spite of but because of the fact that they hate it. Elon Musk’s ownership has inspired many power users to become dissidents against the prevailing regime. But Truth Social will need many millions more @SaberK24s to generate enough activity, and thus revenue, to justify even a fraction of its new stock valuation. As of now, the platform predominantly attracts right-wing diehards, which severely limits its growth potential at a time when even the biggest social networks are struggling. After a boom in activity during the pandemic, platforms, including Instagram and Snapchat, are seeing declining user activity and decreased investor confidence. TikTok is embroiled in congressional debates about a possible ban because of its Chinese ownership. Reddit (owned by the same parent company as The New Yorker), which had its own recent I.P.O., has thrived by going against the grain of algorithmic automation, supporting small-scale, intimate online communities. (For comparison’s sake, Reddit saw more than eight hundred million dollars in revenue in 2023, and its market capitalization is a little more than seven billion dollars.) Truth Social has differentiated itself from Twitter in certain ways; my favorite feature is the Groups tab, which allows users to follow themed interest groups and look at posts from only those groups. I followed “Dogs” and was treated to a blessedly anodyne feed of canine photos and memes, although I did encounter one Doberman named Trump.

Even on the right, Truth Social has failed to become a mainstream community. Trump himself has fewer than seven million followers there. On his Twitter account, which Musk restored to him in late 2022, he has eighty-seven million, though he has posted there only once in recent years, to share his mug shot. The illogical behavior of Truth Social’s stock reminds me of cryptocurrency, which has also been undergoing a revival lately. The price of Bitcoin is hitting all-time highs of above seventy thousand dollars per coin, and not because of any major technological update. Non-fungible tokens, or N.F.T.s, have been replaced by so-called meme coins—cryptocurrencies that rise or fall by their viral enthusiasm—as the obsession of the day. A meme coin called “dogwifhat” (“dog with hat,” appended to an image of such), which was created late last year, has reached a market capitalization of more than four billion dollars. Belief is its own currency, one that can be made more literal in Internet-era financial markets. In the case of meme coins, belief means optimism that people will keep buying into a functionless currency, Ponzi-scheme style, and that you’ll be able to cash out before it crashes. For Trump’s Truth Social stock, it means betting on Trump’s continued relevance and power; how the business will make money can be figured out later.

In the short term, this was not a bad bet. Trump has a way of inflating the value of whatever dubious thing he attaches his name to, at least temporarily: hotels, golf courses, Republican nominees. It is a function of his twisted charisma and extant ability to instantaneously direct the media spotlight toward himself. (His recent hawking of Bibles was met with much approval on Truth Social. “I’d sooner buy a bible from Donald Trump than Joel Osteen,” one user posted.) Buying in to the DJT stock means investing in the Trump brand, and, in a way, giving the former President a backdoor campaign donation: the company’s inflated valuation makes him increasingly wealthy on paper at a time when, among many other legal troubles, he owes a penalty of four hundred and fifty-four million dollars for a civil fraud case decided against him in New York. But he is barred from selling his shares for at least six months, and maintaining the meme-ish financial enthusiasm for the platform may prove difficult given how little there is to back up the company’s valuation. After the stock’s initial spike, the valuation quickly started sloping downward. On Monday, after Axios surfaced the S.E.C. filings, the descent accelerated, and the stock plunged more than twenty per cent. An election result can be disputed, and Sponsored Truths can be peddled, but in the long run financial markets don’t lie. ♦

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Trump could cash out his DJT stock within weeks. Here’s what happens if he sells

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3 weeks ago

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August 23, 2024

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Former President Donald Trump is on the brink of a significant financial decision that could have far-reaching implications for both his personal wealth and the future of his fledgling social media company, Trump Media & Technology Group (TMTG). As the lockup period on his shares in TMTG, which owns Truth Social, nears its end, Trump could soon be free to sell his substantial stake in the company. However, the potential payday, which makes up a large portion of his net worth, comes with considerable risks for Trump and his supporters.

Trump’s stake in TMTG comprises nearly 59% of the company, amounting to 114,750,000 shares. As of now, this holding is valued at approximately $2.6 billion. These shares are currently under a lockup agreement, a common feature of initial public offerings (IPOs), designed to prevent company insiders from immediately selling their shares and potentially destabilizing the stock. The lockup, which began after TMTG’s merger with a special purpose acquisition company (SPAC), is set to expire on September 25, though it could end earlier if certain conditions are met.

Should Trump decide to sell his shares after the lockup expires, the market could respond in unpredictable ways. The sale of a substantial number of shares by a major stakeholder like Trump could flood the market, potentially driving down the stock price. Daniel Bradley, a finance professor at the University of South Florida, suggests that the market might react negatively to such a large sale, particularly if there aren’t enough buyers to absorb the supply. This could lead to a sharp decline in the stock’s value, impacting both Trump’s personal wealth and the company’s market standing.

Moreover, Trump’s involvement in Truth Social has been a key driver of investor interest. The platform, marketed as a free speech alternative to mainstream social media, has attracted a loyal user base largely due to Trump’s presence. If Trump were to sell his stake, it might signal a lack of confidence in the company, potentially shaking investor confidence and further depressing the stock price.

Trump’s decision is also influenced by his ongoing legal battles, which have already cost him over $100 million in legal fees. Selling his shares could provide a significant financial boost, helping him cover these mounting expenses. However, this move could also have political ramifications, especially as he continues his bid for the Republican nomination in the 2024 presidential race.

Trump Media’s success is closely tied to Trump’s political fortunes. The company’s stock has shown volatility in response to developments in the presidential race, with Trump’s chances of winning having a direct impact on the stock’s value. If Trump sells his stake, it could be interpreted as a lack of confidence in his own political future, potentially undermining both his campaign and the company’s prospects.

Truth Social, the flagship product of TMTG, has faced challenges in generating traffic and advertising revenue, especially compared to established social media giants like X (formerly Twitter) and Facebook. Despite this, the company’s valuation has remained high, fueled by investor speculation on Trump’s political future. If Trump remains in the race and manages to secure the presidency, the value of his shares could increase. Conversely, any missteps on the campaign trail could have the opposite effect, further destabilizing the stock.

As the lockup period comes to an end, Trump faces a critical decision that could shape the future of both his personal finances and Truth Social. Whether he chooses to hold onto his shares or cash out, the outcome will likely have significant consequences for the company, its investors, and Trump’s political aspirations.

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Arizona man accused of social media threats to Trump is arrested

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3 weeks ago

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August 23, 2024

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Cochise County, AZ — Law enforcement officials in Arizona have apprehended Ronald Lee Syvrud, a 66-year-old resident of Cochise County, after a manhunt was launched following alleged death threats he made against former President Donald Trump. The threats reportedly surfaced in social media posts over the past two weeks, as Trump visited the US-Mexico border in Cochise County on Thursday.

Syvrud, who hails from Benson, Arizona, located about 50 miles southeast of Tucson, was captured by the Cochise County Sheriff’s Office on Thursday afternoon. The Sheriff’s Office confirmed his arrest, stating, “This subject has been taken into custody without incident.”

In addition to the alleged threats against Trump, Syvrud is wanted for multiple offences, including failure to register as a sex offender. He also faces several warrants in both Wisconsin and Arizona, including charges for driving under the influence and a felony hit-and-run.

The timing of the arrest coincided with Trump’s visit to Cochise County, where he toured the US-Mexico border. During his visit, Trump addressed the ongoing border issues and criticized his political rival, Democratic presidential nominee Kamala Harris, for what he described as lax immigration policies. When asked by reporters about the ongoing manhunt for Syvrud, Trump responded, “No, I have not heard that, but I am not that surprised and the reason is because I want to do things that are very bad for the bad guys.”

This incident marks the latest in a series of threats against political figures during the current election cycle. Just earlier this month, a 66-year-old Virginia man was arrested on suspicion of making death threats against Vice President Kamala Harris and other public officials.

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Trump Media & Technology Group Faces Declining Stock Amid Financial Struggles and Increased Competition

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August 20, 2024

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Trump Media & Technology Group’s stock has taken a significant hit, dropping more than 11% this week following a disappointing earnings report and the return of former U.S. President Donald Trump to the rival social media platform X, formerly known as Twitter. This decline is part of a broader downward trend for the parent company of Truth Social, with the stock plummeting nearly 43% since mid-July. Despite the sharp decline, some investors remain unfazed, expressing continued optimism for the company’s financial future or standing by their investment as a show of political support for Trump.

One such investor, Todd Schlanger, an interior designer from West Palm Beach, explained his commitment to the stock, stating, “I’m a Republican, so I supported him. When I found out about the stock, I got involved because I support the company and believe in free speech.” Schlanger, who owns around 1,000 shares, is a regular user of Truth Social and is excited about the company’s future, particularly its plans to expand its streaming services. He believes Truth Social has the potential to be as strong as Facebook or X, despite the stock’s recent struggles.

However, Truth Social’s stock performance is deeply tied to Trump’s political influence and the company’s ability to generate sustainable revenue, which has proven challenging. An earnings report released last Friday showed the company lost over $16 million in the three-month period ending in June. Revenue dropped by 30%, down to approximately $836,000 compared to $1.2 million during the same period last year.

In response to the earnings report, Truth Social CEO Devin Nunes emphasized the company’s strong cash position, highlighting $344 million in cash reserves and no debt. He also reiterated the company’s commitment to free speech, stating, “From the beginning, it was our intention to make Truth Social an impenetrable beachhead of free speech, and by taking extraordinary steps to minimize our reliance on Big Tech, that is exactly what we are doing.”

Despite these assurances, investors reacted negatively to the quarterly report, leading to a steep drop in stock price. The situation was further complicated by Trump’s return to X, where he posted for the first time in a year. Trump’s exclusivity agreement with Trump Media & Technology Group mandates that he posts personal content first on Truth Social. However, he is allowed to make politically related posts on other social media platforms, which he did earlier this week, potentially drawing users away from Truth Social.

For investors like Teri Lynn Roberson, who purchased shares near the company’s peak after it went public in March, the decline in stock value has been disheartening. However, Roberson remains unbothered by the poor performance, saying her investment was more about supporting Trump than making money. “I’m way at a loss, but I am OK with that. I am just watching it for fun,” Roberson said, adding that she sees Trump’s return to X as a positive move that could expand his reach beyond Truth Social’s “echo chamber.”

The stock’s performance holds significant financial implications for Trump himself, as he owns a 65% stake in Trump Media & Technology Group. According to Fortune, this stake represents a substantial portion of his net worth, which could be vulnerable if the company continues to struggle financially.

Analysts have described Truth Social as a “meme stock,” similar to companies like GameStop and AMC that saw their stock prices driven by ideological investments rather than business fundamentals. Tyler Richey, an analyst at Sevens Report Research, noted that the stock has ebbed and flowed based on sentiment toward Trump. He pointed out that the recent decline coincided with the rise of U.S. Vice President Kamala Harris as the Democratic presidential nominee, which may have dampened perceptions of Trump’s 2024 election prospects.

Jay Ritter, a finance professor at the University of Florida, offered a grim long-term outlook for Truth Social, suggesting that the stock would likely remain volatile, but with an overall downward trend. “What’s lacking for the true believer in the company story is, ‘OK, where is the business strategy that will be generating revenue?'” Ritter said, highlighting the company’s struggle to produce a sustainable business model.

Still, for some investors, like Michael Rogers, a masonry company owner in North Carolina, their support for Trump Media & Technology Group is unwavering. Rogers, who owns over 10,000 shares, said he invested in the company both as a show of support for Trump and because of his belief in the company’s financial future. Despite concerns about the company’s revenue challenges, Rogers expressed confidence in the business, stating, “I’m in it for the long haul.”

Not all investors are as confident. Mitchell Standley, who made a significant return on his investment earlier this year by capitalizing on the hype surrounding Trump Media’s planned merger with Digital World Acquisition Corporation, has since moved on. “It was basically just a pump and dump,” Standley told ABC News. “I knew that once they merged, all of his supporters were going to dump a bunch of money into it and buy it up.” Now, Standley is staying away from the company, citing the lack of business fundamentals as the reason for his exit.

Truth Social’s future remains uncertain as it continues to struggle with financial losses and faces stiff competition from established social media platforms. While its user base and investor sentiment are bolstered by Trump’s political following, the company’s long-term viability will depend on its ability to create a sustainable revenue stream and maintain relevance in a crowded digital landscape.

As the company seeks to stabilize, the question remains whether its appeal to Trump’s supporters can translate into financial success or whether it will remain a volatile stock driven more by ideology than business fundamentals.

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