Donald J. Trump has a long record of business failures and bankruptcies.

But after getting kicked off Twitter in 2021 he launched Truth Social, a social media site.

Truth Social, his would-be Twitter rival, is a high-risk, speculative operation with few hard numbers behind it. It’s already the subject of subpoenas, from regulators and a grand jury, even though it’s barely off the ground. Oh, and even if Trump gets re-elected president, he’s not required to use the social media site much – if at all – to communicate with the public. You buy the stock at your own peril.

That’s not me talking. That’s…er…  the new stock market prospectus for Truth Social. It has just been filed here with the U.S. Securities and Exchange Commission.

In case you missed it, Donald Trump is trying to come back to Wall Street.

He’s in advanced talks to list Truth Social on the stock market by merging its parent company, Trump Media & Technology Group, with a publicly-traded shell company, Digital World Acquisition Corp

See: DWAC up over 15% as it moves to buy Trump Media & Technology Group — but here’s a potential snag

Trump himself has mounting legal woes to handle, as well as a presidential campaign. Meanwhile, Digital World itself has been in trouble with the Security and Exchange Commission, and recently agreed to pay $18 million to settle fraud charges relating to this potential merger.

But never mind all this: The stock is suddenly flying high, as Trump heads towards the presidential nomination for the Republican party, and a possible return to the White House. The stock has tripled in price since the Iowa caucuses in January to $48, potentially valuing the business at $6.5 billion.

But the prospectus for the deal, which runs to nearly 600 pages, is a doozy. It reveals all the reasons why investors jumping on the MAGA hype train might want to think twice, or even three times, for taking the plunge.

“A number of companies that were associated with President Trump have filed for bankruptcy,” it warns investors. “There can be no assurances that TMTG will not also become bankrupt…A number of companies that had license agreements with President Trump have failed. There can be no assurances that TMTG will not also fail.”

In case you’ve forgotten, “The Trump Taj Mahal, which was built and owned by President Trump, filed for Chapter 11 bankruptcy in 1991,” it says. “The Trump Plaza, the Trump Castle, and the Plaza Hotel, all owned by President Trump at the time, filed for Chapter 11 bankruptcy in 1992.”

Trump Hotels & Casino Resorts, which was founded by President Trump in 1995, “filed for Chapter 11 bankruptcy in 2004,” it continues. “Trump Entertainment Resorts, Inc., the new name given to Trump Hotels & Casino Resorts after its 2004 bankruptcy, declared bankruptcy in 2009.”

You know what gamblers say, that the house always wins? Here’s your refutation.

Trump Hotels & Casino Resorts had trouble with the law on the way down, too. “On January 16, 2002, the SEC issued a cease and desist order against Trump Hotels & Casino Resorts, Inc. (“THCR”) for violations of the anti-fraud provisions of the Exchange Act,” the prospectus reveals.

I’ve written about Trump Hotels & Casino Resorts before. Ordinary investors, drawn to the stock by the allure of the Trump name, ended up relieved of their shirts, pants, and shoes and were left standing on the Atlantic City boardwalk in their underwear. Stockholders pretty much lost everything, although Trump himself pocketed millions.

See: Donald Trump was a stock market disaster

See also: Donald Trump’s business disaster is worse than you think

“Trump Shuttle, Inc., launched by President Trump in 1989, defaulted on its loans in 1990 and ceased to exist by 1992,” the prospectus continues. “Trump University, founded by President Trump in 2005, ceased operations in 2011 amid lawsuits and investigations regarding that company’s business practices.”

This, let me remind you, is not the fake news liberal media talking. It’s the stock market prospectus for Trump’s own business.

“Trump Vodka, a brand of vodka produced by Drinks Americas under license from The Trump Organization, was introduced in 2005 and discontinued in 2011,” it goes on. “Trump Mortgage, LLC, a financial services company founded by President Trump in 2006, ceased operations in 2007., a travel site founded by President Trump in 2006, ceased operations in 2007. Trump Steaks, a brand of steak and other meats founded by President Trump in 2007, discontinued sales two months after its launch.” Two months.

But Truth Social will be different, right?

There is also a long section listing all the former president’s current legal troubles. You always know you’re buying a quality stock when the prospectus reads like a police blotter.

Then there’s the “Truth Social” deal itself.

Trump Technology & Media Group “aspires to build a media and technology powerhouse to rival the liberal media consortium and promote free expression,” the prospectus reads.

Total Truth Social signups to date? Er… 8.9 million people.

In the nine months to September, 2023, the business suffered a $10.6 million operating loss on just $3.4 million in sales. 

Meanwhile somehow it racked up $37.7 million in interest expenses. 

If you want more financial details about Truth Social before investing, you are not alone. The board of Digital World, the would-be merger partner, admit that they, too, would like more financial details.

Alas, Trump’s business “did not provide the Digital World Board with TMTG’s financial projections in connection with the Digital World Board’s bring-down due diligence process,” they reveal. 

Oh well. You can’t have everything.

Some of this may be because the people running Truth Social – led by CEO Devin Nunes, formerly a member of the U.S. House of Representatives – don’t actually have too much data. “[I]nvestors should be aware that since its inception, TMTG has not relied on any specific key performance metric to make business or operating decisions,” the prospectus reports. “Consequently, it has not been maintaining internal controls and procedures for periodically collecting such information, if any.” My italics.

The Trump operation has chosen not to track these metrics. It reports: “At this juncture in its development, TMTG believes that adhering to traditional key performance indicators, such as signups, average revenue per user, ad impressions and pricing, or active user accounts including monthly and daily active users, could potentially divert its focus from strategic evaluation with respect to the progress and growth of its business.”

They didn’t want numbers to distract them from the business. Call this the “alternative facts” school of business administration.

But the real peach here is that although investors are buying this stock in the hope that Donald Trump will do for Truth Social what he did for Twitter, there is actually no guarantee he will use it much, or at all. Even if he is elected president.

That’s because, the prospectus reveals, Donald Trump’s agreement with Truth Social is limited. Yes, he is required to post certain of his social media messages there first. But only “non-political” ones, made from his “personal (i.e., non-business)” accounts. And the Truth Social exclusivity on each post only lasts for six hours.

Oh, and Trump can even cancel this agreement with 30 days’ notice, “at any time on or after February 2, 2025.” In other words, shortly after inauguration (if any).

And even until then, who is to decide which social media posts are “political,” and therefore exempt from the exclusivity agreement? Guess. 

“President Trump… may post social media communications from his personal profile that he deems, in his sole discretion, to be politically-related on any social media site at any time,” the prospectus warns. My italics. 

It adds:“As a candidate for president, most or all of President Trump’s social media posts may be deemed by him to be politically related.”

As a result, it warns, investors “may lack any meaningful remedy if President Trump minimizes his use of Truth Social.”

Trump will own at least 58% of the stock in the new company, giving him total control and minority investors nothing but hope. What could possibly go wrong?

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