Raising cash is a vital part of business, and it’s no different for controversial social media platform Truth Social (NASDAQ:DJT). The firm just pulled in a hefty slug of new cash thanks to a recently-exercised set of warrants. That didn’t cut much ice with investors, though, and shares slid over 3% in Tuesday afternoon’s trading.
The warrants brought in a whopping $105 million. Around June 20, a series of events kicked off that saw the warrants exercised and a series of new shares sold. Holders of said warrants were then allowed to buy shares at a set price within a selected time frame.
This move was subsequently regarded as something of a double-edged sword due to investor concerns about dilution as a result of the news shares. In addition, the $105 million already raised may just be for starters, as there’s another $142 million outstanding that could come in if all the warrants get exercised.
But Where’s the Revenue?
There’s good news as a part of this setup. Truth Social currently has no debt on its balance sheet, so the cash can go right to work without having to pay off interest income. However, there are some distressing signs that Truth Social may not have the cash it needs to continue operating. It’s already warned that it “…lacks the financial resources it needs,” and there are bigger problems. The biggest of these might be the lack of visible revenue.
Truth Social is a nascent social media platform in a market that’s already stuffed with others. Its vague promises about a streaming service are tempting, but it needs actual listings of what will be on it to get anywhere because, frankly, the market is also crowded with streaming services. For Truth Social to compete, it needs more specifics, and it’s sorely lacking on those right now.
Should You Invest in Truth Social?
There are still no analysts covering DJT stock, so we turn to the last five days of trading instead. Shares have been in open decline during the period, with little in the way of an intervening rally to break up the losses. As a result, DJT shares are down 16.43% during this time frame.
