Trump’s Truth Social Under the Microscope — Future Is Questionable

Mohit Oberoi, CFA - Author
By

Apr. 22 2022, Published 8:26 a.m. ET

Digital World Acquisition Corp. (DWAC), the SPAC that’s taking former President Donald Trump’s TMTG (Trump Media and Technology Group) public, has been in a freefall. TMTG is the parent company of Truth Social, Trump’s social media platform.

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The DWAC-TMTG merger has been facing SEC scrutiny over allegations of hiding material facts. Allegedly, the SPAC sponsors and Trump were in merger discussions even before the DWAC IPO. Short-seller Kerrisdale Capital has raised doubts over the merger itself. The initial success of Truth Social has also been much lower than envisioned. What’s going on with Trump’s Truth Social and is the company headed for failure?

What is Truth Social?

Truth Social is Trump’s social media platform with an uncanny similarity to Twitter. The platform seeks to promote free speech and calls itself a “Big Tent” social media company that welcomes people irrespective of their political affiliations.

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The platform has been popular among conservatives, many of whom allege that Twitter has been suppressing their voices. Truth Social is currently only available on Apple and that too is for U.S. users only.

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When will Truth Social be on Android?

Truth Social isn't available on Android. The company hasn’t given any firm timeline on when Truth Social be available on Android devices and the website mentions that it's “coming soon” to the Google Play store also.

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How many users does Truth Social have?

According to a Daily Beast report published on April 4, Truth Social only had 513,000 active users in the preceding week. The report also said that daily downloads of the app have fallen to 8,000, which is a fraction of the 170,000 that it hit at its peak.

The engagement levels on the platform are also much lower other conservative media platforms. Even Trump, who was a prolific Twitter user famous for those early morning tweets, hasn’t been active on the platform.

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What’s going on with Truth Social?

Truth Social faced almost humiliating initial hiccups when it soft-launched in February. There were technical glitches and initial users, a lot of whom were die-hard Trump fans, vented their anger on other social media platforms.

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Trump appointed David Nunes as the company's CEO. Nunes left Congress to join Trump’s venture. Nunes doesn't have any experience running a social media company and his education is in Agriculture. Proximity to Trump seems to have been his biggest credential for the top job at Trump’s latest business venture.

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There has also been a large-scale turnover at Truth Social. Reuters reported that Josh Adams and Billy Boozer, who were the chief technology and chief product officers, at Truth Social resigned. Trump made several records of turnover as he fired several of his aides from the White House.

Execution is the biggest challenge for Truth Social.

The biggest challenge for Truth Social and TMTG is execution. Like many other fellow companies that are eyeing a SPAC merger to go public, TMTG also made some rosy forecasts. The company plans to be the next Twitter, Amazon, and Netflix.

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This is somewhat similar to startup EV (electric vehicle) companies planning to be the next Tesla. Most of these “Tesla killers” are struggling with execution and some are even staring at bankruptcy.

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The product proposition for Truth Social seems to have been to create a Twitter clone and capitalize on the conservative anger and Trump’s popularity. However, anger alone might not take Truth Social too far, which is visible in its falling downloads.

What separates Tesla from “Tesla killers” is the execution. The company is delivering record vehicles and generating record profits and cash flows even as other automakers, legacy or startup, are cribbing about supply chain issues.

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Will Truth Social fail?

While Truth Social may or may not fail, it might not see the kind of success that it envisioned in its merger presentation. If Elon Musk manages to take over Twitter and revise its free speech policies, it could be the proverbial final nail in the coffin for Trump’s Truth Social.

Trump’s business credentials have always been under the scanner and he has often boasted about his deal-making capacities. With Truth Social, Trump might end up having another dubious business venture in his empire.

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