Twitter’s Trump Ban Gave Birth to $8B Truth Social That is Now Chasing Reddit
Truth Social Competing With Reddit? Image: Pete Linforth/Pixabay
Key Takeaways
- Reddit’s stock market debut saw its value soar to nearly $9bn while Truth Social achieved nearly $8bn.
- Truth Social might be overvalued as per some analysts.
- Can Truth Social compete with Reddit’s user engagement?
The debut of former US President Donald Trump’s Truth Social has sparked attention, a company born after his contentious ban from Twitter (now X). Some analysts are calling the company overvalued when compared against Reddit’s valuations which has been a long-established player.
The Rise of Truth Social
Donald Trump’s foray into social media via Truth Social began after his suspension from Twitter (now X). The company instigated a permanent ban on concerns over the ‘incitement of violence’ in 2021.
Trump’s return to digital social space happened in early 2022 with Truth Social. Despite Elon Musk reinstating Trump’s account in late 2022, he refused to return. March 2024 now marks the acquisition of Trump Media & Technology Group Corp by Digital World Acquisition Corp, paving the way for Truth Social’s entry onto the Nasdaq stock exchange.
The platform, touting itself as a bastion of free speech, has since seen its valuation approach $8b. But its quick assimilation and fervent support of Trump demonstrate a different story.
Financial Face-off: Truth Social vs. Reddit
Based on market reports after the listing of the two companies, Reddit’s shares surged by nearly 50% taking its valuation to the vicinity of $9b. Donald Trump’s Truth Social on the Nasdaq witnessed a 16 % increase in its shares, pushing its valuation to nearly $8b.
As per figures by Morning Brew, despite Truth Social’s lower revenue of $4.6m and monthly active users totaling 5m, its market cap nearly rivals that of Reddit, which boasts $804m in revenue and a significantly higher user engagement with 73m daily active users. The valuation has led some analysts to deem Truth Social as overvalued.
Political Dynamics and Platform Identity
Truth Social’s identity is deeply entwined with politics, initially sparked by Trump’s exclusion from mainstream social media. The discourse on X suggests that while Democrats attempted to financially undermine Trump, Truth Social emerged resiliently with high valuations.
Meanwhile, despite Truth Social’s proclamation as a nonpartisan platform, Pew Research Center’s 2022 study indicated a right-leaning, pro-Trump user base, with a significant portion of content reflecting religious, patriotic, or pro-America sentiments.
The ideological skew notes the platform’s niche appeal when Reddit has carved a space for years.
Truth Social Market is Smaller
The entry of Truth Social into the public market is chasing the valuations of Reddit. However, platforms are not just defined by technology and user experience but by broader social media impact. Truth Social has gained success after its public listing with high valuations but whether it’ll be able to maintain its daily user base is yet to be seen.
