Shares of Trump Media & Technology Group fell by more than 13 per cent on April 1, following revelations that the Truth Social parent company is grappling with financial uncertainties shortly after its recent public debut through a blank-check merger.

According to filings, the company reported a net loss of $58.2 million for the fiscal year ending December 2023, a significant downturn from the $50.5 million net profit recorded in the previous year. 

Despite an increase in revenue to $4.13 million in 2023 from $1.47 million in 2022, Trump Media & Technology Group raised concerns about its ability to meet financial obligations, citing doubts about its ability to address liabilities, including those tied to previously issued promissory notes.

The company anticipates continued operating losses and negative cash flows as it strives to expand its user base, attract platform partners, and secure advertisers. 

Despite a promising initial surge of over 16 per cent on its first trading day fueled by retail investors, including supporters of former President Donald Trump, the stock has encountered volatility, experiencing its second consecutive session of decline on April 1.

In March, the former President edged on securing a notable investment amount from his stake in social media app Truth Social, via a merger deal valued at about $5.7 billion. 

The merger comes as Trump navigates the financial ramifications of various legal proceedings, including a $454 million judgement in a civil fraud case in New York.

Set to take place with Digital World Acquisition Corp (DWAC), a special purpose acquisition company (SPAC), the merger aims to bring Trump Media & Technology Group (TMTG) to the stock market. 

Shareholders of DWAC have shown their support for the merger, paving the way for its completion in the near future, although the deal faces several hurdles including lawsuits demanding a greater share allocation for former associates involved in the deal's early stages.

Despite these challenges, the merger is anticipated to provide TMTG, the parent company of Truth Social, with a crucial $300 million cash infusion. This comes at a time when the company has reported operational losses and has been sustaining itself through loans convertible into stock.

The valuation of TMTG could soar to as much as $5.7 billion upon the merger's completion, a figure that could increase further when accounting for additional warrants and shares. This valuation spike is largely fueled by the enthusiastic support of Trump's followers and retail investors, despite recent dips in Digital World's stock price following the merger's approval.

(With Reuters Inputs)