Trump’s Three Penny Media Opera

Photo by Jon Tyson

There has to be some irony that as Donald Trump sits in the dock in lower Manhattan, on charges of cooking his corporate books for $130,000 after paying off a porn star (only the flag-waving Supreme Court would let him walk), while slightly to the west, on Wall Street, the same grifter (here as the majority shareholder in Trump Media and Technology Group or TMTG) stands ready to rake in billions from yet another sting. In this instance, the compromised adult actress is the notion that public stock markets are “efficient and fair.”

When in late April we last checked in with the stock that trades over-the-counter under the ticker symbol DJT (in effect, Trump has IPO-ed his campaign and possible future presidency), the share price was in free fall from over $70 into the $20 range.

In early May the price recovered to the mid-$50s after a ring of Trump Media insiders committed capital to chasing short sellers from the stock. Easy to do, as almost 80% of company’s shares are closely held by Trump, the board, cronies, and insiders; the true float is minuscule.

The company’s humble brag that it has 621,000 shareholders (“the vast majority of whom are retail investors”) is a populist smokescreen; it’s a Trump company run by Trump lackeys, akin to Trump Steaks, and has no business being listed on a public exchange.

All the while, in the first quarter of 2024, Trump Media rang up $328 million in accumulated losses, although that did not stop it from giving Trump more shares worth in today’s market about $1.6 billion. As Mel Brooks liked to say: “It’s good to be the king.”


Shares in DJT began trading on March 26, 2024, after Trump Media engineered a reverse merger with Digital World Acquisition Corporation, which brought $300 million to Trump’s social media start-up and access to Nasdaq.

The newly listed company, TMTG, had everything a public company could dream about—cash ($233 million) on the balance sheet, a public listing, stock options for the executives, incentive compensation, warrants, convertible notes, preferred stock, a whale of a majority shareholder (Trump), investment bankers, media advisors, auditors, and a suite of corporate offices in Sarasota, Florida. The only thing the company didn’t have was paying customers or clients. But they were beside the point of the exercise.

TMTG is a shell corporation from which the Trump family is in the process of extracting the pearl, worth billions, from market suckers that the Securities and Exchanges Commission (SEC) is seemingly too busy to protect.


In recent weeks, several developments have come to light that, if the SEC was a functioning regulator, might be triggering yet another Trump investigation—this one into securities fraud.

First, it was disclosed that the external auditor for TMTG, BF Borgers, had pled guilty and paid $14 million in fines for operating as a “sham audit mill”, in effect for blessing all sorts of bogus corporate transactions or looking the other way when its clients made various representations to the SEC and other financial bodies.

Trump Media was not mentioned in the settlement with BF Borgers, although that judgment, which effectively put Borgers out of business, explains why Trump Media, from its offices in Sarasota, Florida, chose as its external auditor an unknown, storefront, one-man band located in a Lakewood, CO, subdivision.

Other Borgers clients included Lingerie Fighting Championships Inc., Inc., and United Cannabis Corp.

If you’re Donald Trump and have parlayed a few social media posts into a public company and meme stock now with a market cap of $8 billion, why take the risk that a Big 3 auditor such as PWC or Deloitte might rain on the windfall parade by asking embarrassing questions about Trump Media’s lack of customers or the millions paid out in stock to its owner or management.

Better to search around the country for a rubber-stamp auditor who for a fee would sign off on anything, including the assertion that Trump Media is a going concern and not simply a drain set up to ensnare gullible MAGA supporters willing to throw money at the listed stock of their hero (after having already sent millions to this PAC so that he can use that money to pay his criminal lawyers).


The other recent development is that TMTG finally released its first quarter financial statement, and it reported in Q1 2024 that Trump Media lost $328 million on revenue of $770,500 (just to be clear, that’s revenue of seven hundred thousand five hundred dollars and a loss of three hundred and twenty-eight million dollars).

Mind you, these are management accounts, not audited financials, as between the demise of BF Borgers and the hiring of new accountants (Semple, Marchal & Cooper), there was only time for the new external auditors to “review” the Q1 financial statements that the company had previously been prepared under Borgers’ freebooter supervision.

Semple, Marchal & Cooper is located in Phoenix, Arizona (not Sarasota), only lists on its website seven professionals under “Our People”, and boasts that it “is one of the pre-eminent regional Certified Public Accounting firms in the Southwest,” where, unless I am missing something, Trump Media does very little business.

It’s lucky for Semple, Marchal & Cooper that all it could do with these statements is “review” them because they read like a case study in financial hustle, from which the only possible conclusion about the business is that exists to funnel other people’s money to Donald J. Trump and a few cronies.


Let’s start with the income statement that reports a “gross profit” (well, adjusted revenue) of $677,100 and a “loss from operations” of $98.4 million.

How, you might ask, could a company reporting revenue of less than $700,000 in the quarter rack up $98 million in operating losses?

One of the line items on the income statement is “research and development” (itemized as $33.1 million), which sounds like investments in social media software to power Trump Media as it competes with X, Facebook, and Google, except that when you turn to the notes in the financial statements, they state:

Research and development expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for our engineers and other employees engaged in the research and development of our products and services. In addition, research and development expenses include allocated facilities costs, and other supporting overhead costs….

Mind you, on the balance sheet, “property and equipment, net” is carried at $23,700, so don’t hold your breath that Trump Media acquired a social media supercomputer for its $33 million.

Later on, the quarterly report adds:

Research and development expenses increased by approximately $30,346,500, or 1,079%, for the three months ended March 31, 2024, compared to $2,812,100 for the three months ended March 31, 2023. The increase was primarily due to $30,142,500 of non-cash stock-based compensation expense related to the issuance in March 2024 of convertible notes to certain vendors engaged in the development of our planned live TV streaming platform.

* * *

In this case, although it is not stated directly, my guess is that much of the $30.3 million in R&D money was paid to Rumble, another Trumpist social media company (a wannabe MAGA YouTube) that has Elon Musk, J.D. Vance, and Vivek Ramaswamy in its shadows.

Rumble is the company that places all of the ads (such as they are) on Trump Media’s Truth Social. Why it needed $30 million upfront to stream Truth Social video is anyone’s guess; the notes do not say.

What’s also obscured in the Trump Media quarterly financials, in the “revenue recognition” section, is at what point Truth Social is actually paid cash for the ads that Rumble consolidates on its site. My guess is that little of the $700,000 reported this quarter in revenue has yet to be paid.

Nor is it known for what reasons the SEC is “actively” investigating Rumble. But we do know that it acted as the “official streaming partner” of the Republican Party’s third primary debate in 2024, held in Miami.


The financial sleights-of-hand don’t stop at research and development, as in the first quarter Trump Media also reported $64.7 million in “general and administration” expenses. What might they be in a company with almost no revenue?

According to the notes in the Form 10-Q:

General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation for our executive, finance, legal, information technology, corporate communications, human resources, and other administrative employees….

The increase was primarily due to $54,445,500 of non-cash stock-based compensation expense recorded in connection with the issuance of Private TMTG Promissory Notes issued to Company executives (and one consultant) that converted into shares of our common stock upon execution of the Merger.

In other words, yet more bonuses for the employees of Trump Media (only 36 people work for the company!), not to mention all the cronies and Trump insiders who get to feed at the trough of easy shareholder money.

As bad as you might think many public corporations are, I assure you that very few, based on quarterly revenues of $700,000, payout “stock-based compensation” of close to $100 million. (The average annual revenue of a Starbucks franchise is about $800,000 to $1 million a year, and I doubt many baristas see bonuses of $100 million.)


The $98 million of “research and development” and “general and administrative” expenses pale, however, compared to another line item in the income statement, which is that the company reported a loss of $225 million based on a “change in fair value of derivative liabilities,” which—without trying to get too technical—is the marking-to-market of the warrants that Trump Media issued to raise capital for the company.

Although it is hard to reconcile the warrant accounts, the company most likely has issued some 17,996,742 warrants with an exercise price of $11.50 per share.

In other words, holders of these warrants can exchange one warrant for one share of TMTG stock by paying $11.50, even when the shares are trading in the market at $40-50 a share.

Accounting rules require TMTG to “mark-to-market” these securities, in this case showing a potential loss of $225 million, although it is a “non-cash” entry, and the loss is only recognized, or not, when the derivatives are closed out or expire.

Many public companies issue warrants and other convertible securities, and there is nothing inherently wrong with such an asset class, although, taking a longer view of Trump Media (basically an empty vessel bilking the market), what the warrants give to the initial investors a way to cash out of the company and earn a handsome windfall while Trump is talking up the stock before it collapses.

In market parlance, this kind of scheme is known as “pump and dump”, and that’s probably all that Trump has on his mind, although he personally cannot sell any of his 64.9% stake (114,750,000 shares) in the company until the end of September. (Hence we’re still in the “pump” phase.)


Overall, much like Trump himself, the original investors (mostly Trump insiders) in Digital World Acquisition Corp. and Trump Media have little at risk in the shady venture, in that many early-round, seed money investors only invested in Trump Media through convertible notes that pay fixed interest (between 5-10%) and can be converted into ordinary shares in Trump Media at the bargain-basement price of about $4.50 share.

Trump himself didn’t even put up a loan for his own social media company or risk venture capital in the enterprise. All he agreed to do was lend his name and his social media account (but subject to restrictive conditions—for example, only a six-hour exclusive right to the content of his posts) to the enterprise, and in exchange, he received 57.6% of the listed company, TMTG.


For the sycophants on the Trump Media board (Don Jr. and Devin Nunes among them), that gift to His Rotundity wasn’t enough, and they gave Trump the further emolument of 36,000,000 so-called Earnout Shares (to be “earned” based on market-price thresholds being met).

These additional 36,000,000 shares were delivered to Trump on April 26, 2024 (after the closing of these quarterly financials), and their worth to him, at $45 a share, is another $1.6 billion, at least on paper.

Whether the company will still be trading at $45 a share when he comes to sell his 64.9% stake in the money-losing venture is another question.

Not many companies with quarterly revenue of $700,000 trade at a market cap of roughly $8 billion. That’s probably a valuation on the worth of a future Trump presidency, not his money-bleeding social media company.

Generously, I would value the company based only on the cash on its balance sheet less the average annual burn rate of $12 million, which puts the market value closer to about $1 a share.

If the company is signing $30 million sweetheart deals with Rumble (to curry favor with Elon Musk and trial advance man J.D. Vance), the burn rate will quickly double or triple.


A large part of the reason that Trump Media’s only business is self-dealing and stock-jobbing is that the company’s operating plan is built around Fox News platitudes. Here’s how it is described in the Form 10-Q:

TMTG aspires to build a media and technology powerhouse to rival the liberal media consortium and promote free expression. TMTG was founded to fight back against the big tech companies–Meta (Facebook, Instagram, and Threads), X (formerly Twitter), Netflix, Alphabet (Google), Amazon and others–that it believes collude to curtail debate in America and censor voices that contradict their “woke” ideology. TMTG aims to safeguard public debate and open dialogue, and to provide a platform for all users to freely express themselves.

I am not sure how they plan to accomplish this with 36 employees and $23,000 in computers, but for six hours of Trump’s tweets, the board decided to hand him another $1.6 billion in new shares.

Then there is the problem that, by its own admission, Trump Media is indifferent to the metrics that drive (successfully I might add) its competitors.

For example, the Form 10-Q is dismissive of the company ever attempting to understand how it makes money (not that quarterly revenue of $700,000 and losses of $98 million qualifies as “making money”). It states:

At this juncture in its development, TMTG believes that adhering to traditional key performance indicators, such as signups, average revenue per user, ad impressions and pricing, or active user accounts including monthly and daily active users, could potentially divert its focus from strategic evaluation with respect to the progress and growth of its business. TMTG believes that focusing on these KPIs might not align with the best interests of TMTG or its stockholders, as it could lead to short-term decision-making at the expense of long-term innovation and value creation. Therefore, TMTG believes that this strategic evaluation is critical and aligns with its commitment to a robust business plan that includes introducing innovative features and new technologies.

Were the Form 10-Q report transparent, it might well state:

TMTG is ostensibly a social media enterprise listed on the Nasdaq exchange, but in reality is a cover story enabling the Trump family to establish a drain from the capital markets into their (depleted) private accounts. TMTG loses millions each year, yet it rewards its management and Donald Trump himself with millions (billions in the case of Trump) in bonuses and other stock options. The purpose of the company is to pump up the stock prior to the 2024 election and then, come the end of September, to dump the shares either on gullible MAGA investors or perhaps the Saudis (who might want to own a stake in a future Trump presidency), and to allow the Trump family to walk away from the company with billions (in exchange for having hyped a money-losing venture, as with so many other Trump companies).

As Bertolt Brecht liked to say: “What’s robbing a bank compared with founding a bank?”

Matthew Stevenson is the author of many books, including Reading the Rails, Appalachia Spring, andThe Revolution as a Dinner Party, about China throughout its turbulent twentieth century. His most recent books are Biking with Bismarck and Our Man in Iran. Out now: Donald Trump’s Circus Maximus and Joe Biden’s Excellent Adventure, about the 2016 and 2020 elections.