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Former President Trump’s TRUTH Social launched on Apple’s AAPL App Store on Monday, February 21. After a burst of downloads the number of them has dropped dramatically. This is probably partly due to various technical issues on the site as there are around 1.5 million people on the waitlist, but it could also be an indication that high demand for it won’t materialize. Given the current rate of downloads TRUTH Social will be hard pressed to achieve the forecasts it made to investors.
Downloads down 97%
Sensor Tower monitors various metrics of mobile apps and has been tracking TRUTH Social from its launch. From the latest week’s data it shows that downloads have fallen 97% from the initial burst the first week.
Stephanie Chan, Sensor Tower’s Mobile Insights Strategist, said “It’s difficult to predict how TRUTH Social will perform in the future as we’ve seen apps surge in popularity at launch and then decline, as well as vice versa in cases such as Parler, which picked up traction years after it launched in late 2018.”
She added, “The app faces the added challenge of entering a competitive space, especially one that relies on a network effect, which will necessitate—among addressing any technical hurdles—a significant, sustained marketing campaign to surmount.”
On the Apple App Store TRUTH Social has fallen from number 19 to number 33 in the Social Networking category over the past few weeks. It lies between Talkatone: WiFi Text & Calls and Messenger Kids.
Key trends to note
Well short of management’s projections
On December 6 Digital World Acquisition Corporation or DWAC, the SPAC that is merging with President Trump’s newly formed media company, included an investor presentation in an SEC filing (scroll the bottom of the filing). One of, if not the most important chart in it, is the last one showing revenue projections from 2022 to 2026. The reason it is so important, besides estimating revenues, users and average revenue per user, or ARPU, is that it helps to justify a stock price that has skyrocketed since the merger was announced.
In the last slide titled “Revenue Projections” there are assumptions for TRUTH Social, the Twitter style social media site, and TMTG+, a subscription service similar to Netflix NFLX or FOX Nation. The slide contains estimated number of users or subscribers, how many could be monetized for TRUTH Social and ARPU for both offerings. The graph also shows how much total revenue these would generate.
TRUTH Social total users (probably year-end numbers)
Unless downloads can pick back up the number of downloads for 2022 will be far short of the 16 million projected.
As can be seen in the Sensor Tower numbers and using my assumptions for the rest of the year, TRUTH Social may only have 16% of what management was projecting.
Trump’s Social Media company revenue projections
Implications for the SPAC’s stock price
It is not surprising to see TRUTH Social have implementation and rollout issues. This is typical for any startup creating a new app that is targeting millions of users.
However, the SPAC Digital World Acquisition Company (symbol: DWAC) that is planning on merging with Trump’s social media company has a pre-merger valuation of about $1.8 billion and almost $10 billion when the additional shares that will be awarded post-merger are included.
While TRUTH Social is the smaller revenue component of Trump’s Media and Technology Group, it is probably the easier segment of the business to get up and running. The other segment, TMTG+, which aims to compete with companies such as Netflix and Disney, will be a much harder technology challenge. If TRUTH Social does not scale it could materially damage the outlook for TMTG+ and DWAC’s stock price.
DWAC stock price