Trump Media recently submitted an updated financial inspection report by a new public accounting firm after its previous auditor was charged with fraud by the SEC. Shares of Trump Media initially dropped over 7% on the news, but recovered slightly to be down 6% as of 1:00 p.m. ET. The company, majority-owned by former President Donald Trump and trading as DJT on the Nasdaq, stated that its revised registration statement includes a reaudit by Semple, Marchal & Cooper, LLP. This amendment does not involve offering any new shares. Trump Media CEO Devin Nunes expressed gratitude to SMC for their work and hopes for a prompt review by the SEC.
Semple, Marchal & Cooper, LLP was hired by Trump Media in early May to replace its previous auditor, BF Borgers CPA. The SEC had charged BF Borgers with fraud just three days before Trump Media made the switch. The regulatory agency accused the firm of failing to adhere to auditing standards and misrepresenting their work to clients. As a result, BF Borgers and its owner agreed to significant penalties and permanent bans from auditing public companies. Despite the stock drop on Monday, Trump Media still holds a market capitalization of nearly $7.5 billion, drawing criticism for its disproportionate value compared to its reported revenue.
Critics point out that while Trump Media’s main product, Truth Social, is struggling to retain users, it generates a fraction of the traffic seen by industry leaders like X and Facebook. This disparity in user engagement may be contributing to the company’s challenges in maintaining a competitive position in the social media landscape. As Trump Media works to address financial concerns and maintain its market value, the future of Truth Social remains uncertain. Investors and industry experts will be watching closely to see how the company navigates these obstacles and whether it can successfully grow its user base in the increasingly crowded social media market.
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