Donald Trump could soon see his net worth doubled as Truth Social owner Trump Media & Technology Group has finalized its deal to go public. Though the former president’s wealth is mostly on paper, Bloomberg estimated on that Trump’s net worth spiked by $4 billion on Monday—and for the first time he made the list of the world’s 500 wealthiest people on the Bloomberg Billionaires Index.
The social media platform, which was only launched two years ago, is now touted to be worth at least $5 billion and upwards of $10 billion even as it has just over 600,000 active monthly users. What makes that somewhat surprising is that Trump estimated in an April 2023 personal financial disclosure that the site’s value ranged from $5 million to $25 million, the Associated Press reported last year.
Truth Social generated less than $5 million in revenue in 2023 and actually lost money. Yet, this is par for the course for social media platforms—where they generate little income and yet are valued in the billions!
“Social media platforms tend to be valued based on their number of users and what’s termed Value per Active User or Average Revenue per User,” said Dr. John M. Veitch, CFA, dean for the School of Business and Management at Notre Dame de Namur University.
“Together these provide some idea of the revenue that the platform will generate over the future,” Veitch explained. “ARPU or VPAU are used because many social media companies do not have positive earnings or even significant revenue in their early years.”
It’s All About The Base
The ARPU and VPAU are thus the basis for valuing Truth Social at the billions being tossed around. But the connection to Trump could be truly priceless.
“When looking at the unique aspect of Truth Social tied to its association with former President Donald Trump, its valuation also critically hinges on the unwavering loyalty of his core base,” added Shelly Matthews, director of finance at CampusExplorer.com.
That demographic represents a significant portion of the platform’s user base and exhibits high levels of engagement and activity. Their loyalty and commitment to the platform could be seen as providing a stable foundation of users who are unlikely to migrate to other platforms, presenting a distinct value proposition for advertisers and investors.
“This steadfast user base not only ensures consistent engagement and data generation but also stabilizes the platform’s revenue streams through targeted advertising and potential subscription services,” said Matthews. “Moreover, the direct association with a polarizing figure such as Trump amplifies the platform’s visibility and influence within certain segments of the political and social spectrum, further enhancing its value.”
Therefore, the combination of a loyal user base, the potential for targeted advertising, strategic partnerships, and the platform’s role in the broader media and political discourse all contribute to its valuation.
“These factors underscore not only Truth Social’s worth but also illustrate the broader dynamics that underpin the valuation of social media platforms, where user engagement, data monetization, and the capacity to influence public discourse are pivotal,” Matthews continued.
Twitter Sold For $44 Billion
It needs to be remembered that it wasn’t all that long ago that tech entrepreneur Elon Musk paid $44 billion to acquire Twitter, which he has since rebranded as X, while SnapChat’s founders were offered $2 billion from Facebook when it was practically brand new.
Those facts could suggest that starting a social media platform could make an individual extremely wealthy in a very short time.
“Yes, to the extent that you know how to produce the next big thing on a social media platform,” said Veitch. “It’s not just about attracting large numbers of users, but users who are interesting to advertisers and collecting information on your users that can be monetized to advertisers and others. So if you can do all of that, then you will end up being extraordinarily wealthy. Hopefully, you’ll be able to buy whatever you want to assuage your guilty conscience for figuring out a better way to monetize people and their interests.”
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