Trump’s Truth Social Platform Could Struggle to Survive Without New Cash

Former President Donald J. Trump’s social media company is running on fumes and could be at risk of folding if it doesn’t find new funds in a hurry.

In a regulatory filing this week, auditors for Trump Media & Technology Group expressed doubt about the company’s ability to continue as a “going concern” without new financing. The filing also made clear that Trump Media desperately needs to complete its long-delayed merger with a cash-rich shell company so that it can tap $300 million in cash, especially if its flagship online platform, Truth Social, has any chance of surviving.

The document, which offers the first detailed look at Trump Media’s finances, was filed with regulators as part of the company’s pending deal with Digital World Acquisition Corporation, the publicly traded shell company it agreed to merge with in 2021.

If the transaction goes through, it could value Trump Media at $1 billion based on Digital World’s share price of $16.60. Yet, the rich valuation is no guarantee that the company, which largely relies on advertising revenue from Truth Social — and Truth Social itself — will be a viable business. Trump Media had little cash on hand by the end of June, and it has exhausted most of the $37 million in private financing it has raised since 2021, according to the filing.

“Contrary to the relentless mainstream media campaign peddling false information about Truth Social, we’ve given millions of Americans their voices back using technology operated at a fraction of the cost of the Big Tech platforms,” Shannon Devine, a spokeswoman for Truth Social, said in a statement. Ms. Devine added that “Truth Social continues to move forward toward completing its merger, which we believe will enable important new ventures for the company.”

Since its founding, Truth Social has been a personal megaphone for Mr. Trump, who uses the platform frequently to rail against his critics as he makes another run for president and confronts an array of criminal and civil lawsuits. The platform is popular with some of his most ardent supporters. But on any given day, much of the advertising on the platform comes from weight loss products, gold coins and “natural cures” for a variety of medical ailments.

During the first six months of this year, Trump Media took in just $2.3 million in advertising revenue, according to the filing.

“Truth Social is obviously not surviving on ad dollars,” said Shannon McGregor, a professor of journalism and media at the University of North Carolina who has studied social media platforms. “And the ads that are being sold are not robust or sustainable.”

The former president’s platform of choice remains a relative minnow in the social media universe. This year, the Truth Social app has been downloaded three million times, according to Sensor Tower, a data provider. By comparison Elon Musk’s X, formerly known as Twitter, has been downloaded 144 million times and Meta’s Threads has been downloaded 171 million times in the nearly five months since it debuted.

In all, Truth Social has been downloaded seven million times since its launch in early 2022, according to Sensor Tower.

Mr. Trump has 6.5 million followers on Truth Social, compared with the 87 million he had on Twitter when he was prohibited from posting on the platform after the Jan. 6, 2021, attack on the Capitol. Mr. Musk, after buying Twitter, let Mr. Trump return to the platform, but the former president has posted only one message on X.

Ms. McGregor said other social media platforms had tried to increase their audience reach by reaching deals with media personalities and influencers who bring with them a ready made group of followers.

If the merger is completed, Trump Media would have the cash on hand to retain the services of conservative media influencers. But Ms. McGregor said some people might be reluctant to join a platform that was so identified with Mr. Trump, whose political future remained uncertain.

“What is the future vision for a platform that is built on being a microphone for one person,” is the obvious question for any social media influencer who might be thinking of joining Truth Social, she said.

The glimmer of good news for Mr. Trump is that this week’s filing of the updated merger document is an indication the deal with Digital World is moving along after being held up for nearly two years because of a regulatory investigation.

The filing of a revised prospectus was one of the requirements Digital World had agreed to as part of an $18 million regulatory settlement it reached this summer with the Securities and Exchange Commission. The settlement resolved an investigation into an allegation that Digital World had flouted securities rules governing special purpose acquisition companies by engaging in early merger talks with Trump Media before its I.P.O.

Trump Media, in a post on Truth Social, called the filing of the revised merger document “a major milestone toward completing our merger.”

The push to complete the merger comes as Mr. Trump’s real estate business in New York is being threatened by Attorney General Letitia James’s civil fraud lawsuit against the former president, his adult sons and their family business. In September, a New York judge considering the challenge ruled that Mr. Trump had committed fraud by inflating the value of some of his real estate assets and stripped him of control over some of his signature properties.

For the past several weeks, the same judge has been hearing testimony from witnesses — including Mr. Trump — to determine what kind of ultimate punishment should be meted out.

With the future of some of his real estate business on shaky ground, Trump Media suddenly has become a more important piece of the former president’s business empire and calculating his personal net worth. If the merger is completed, Mr. Trump, as chairman, stands to become the single largest shareholder of Trump Media.

The company’s possible $1 billion valuation after the merger is a far cry from the roughly $10 billion price tag investors had given the deal shortly after it was announced in October 2021. Still, it is significantly higher than the $5 million to $25 million valuation Mr. Trump had put on Trump Media in a financial disclosure form this year.