Trump Media’s Financial Controls Crack Under Scrutiny—’Material Weakness’ Admission Sparks Skepticism

Another day, another corporate governance red flag waving over Trump Media. The company just coughed up an admission of ’material weakness’ in its financial reporting controls—Wall Street’s polite way of saying ’we’re flying blind.’

No surprise here: When you merge a SPAC, a meme stock frenzy, and political theater, rigorous accounting tends to take a backseat. Auditors are now scrambling to plug the leaks, but investors might want to ask why this wasn’t caught before the retail crowd piled in.

Funny how these ’weaknesses’ always surface after the bagholders arrive.

Trump Media loses $31.7 million, hires new staff to fix issue

The company reported a net loss of $31.7 million for the quarter ending March 31. Despite that, it said it closed the quarter with $759 million in cash, cash equivalents, and short-term investments.

The company’s statement said the weak financial controls were mostly caused by missing accounting policies and a lack of staff with the right skills. In the company’s own words:

“TMTG’s management determined that the material weakness primarily related to its failure to design and maintain formal accounting policies, processes, and controls to analyze, account for, and properly disclose income recordation as well as a need for additional accounting personnel who have the requisite experience in SEC reporting regulation.”

Trump Media claimed it’s already started fixing the problem by bringing in new accountants who understand how to handle reporting rules. It didn’t say how many people were hired or how long the fixes might take. But the company said this was part of a larger effort to fix the internal systems that broke down.

Trump Media pushes expansion, signs crypto partnerships

During the same quarter, TRUMP Media said it rolled out a new fintech brand called Truth.Fi and signed a partnership with Crypto.com and Yorkville America Digital to work on new exchange-traded funds and related products. These developments came while the company was still dealing with weak financial controls.

The firm said its current cash pile and low spending give it enough room to expand, keep building its platforms, and go after new acquisitions. It also claimed this setup would let it invest in areas like crypto and retail investment tools without running into cash problems.

In a letter to shareholders, CEO Devin Nunes said the company is still “hunting for top-quality assets.” Devin said the goal is for Trump Media to become a much larger firm that owns and operates many types of products and services, not just its Truth Social app.

In April, the company said it signed a binding agreement to roll out a full set of retail investment products, including crypto. The move attracted pushback from ethics watchdogs, who questioned how the company WOULD manage conflicts of interest between its media platform and its financial ambitions.

Despite all this, Trump Media’s stock barely moved after the announcement. The company said its net sales went up a little—rising 6% to $8.2 million. But the $31.7 million in losses still overshadowed that. The company did not say when it expects to return to profit.

Trump Media closed its filing by saying the $759 million in liquidity will help fund the company’s next phase, even as it scrambles to fix its accounting. The company made it clear that it still wants to grow—by pushing into crypto, expanding its media footprint, and going after more deals. But for now, its financial controls are still a work in progress.

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