Trump Media Cites ‘Material Weakness’ in Its Financial Structure

Trump Media & Technology Group (TMTG, the company behind the conservative-friendly social network Truth Social) is back in the spotlight. But this time, it’s not about fiery posts or meme stocks. It’s about something way less flashy but far more serious: a “material weakness” in its financial controls. In plain English? Their accounting playbook has holes big enough to drive a golf cart through. This red flag comes hot on the heels of Trump’s administration touting a U.S.-China trade deal. While the White House is light on specifics, here's what’s on the table: U.S. tariffs on Chinese imports are being reduced from 145% to 30%, and China's duties on U.S. goods are dropping from 125% to 10%, but only for 90 days. It’s a truce, not a treaty. Now, back to the accounting drama.

When the Ledger Hits the Fan

TMTG’s recent SEC filing exposed a truth: the company lacks the internal controls to ensure accurate financial reporting. The culprit? No formal accounting policies, not enough SEC-savvy personnel, and poor documentation processes. The statement reads like a finance pro’s nightmare: “There is a reasonable possibility that a material misstatement of an entity’s financial statements will not be prevented or detected on a timely basis.”

And the numbers? They paint a bleaker picture.

• Q1 2025: $31.7 million in net losses on just $821,000 in net sales.
• Q1 cash position: $759 million in liquid assets, with $9.8 million in debt.
• 2024 full year: $401 million net loss on $3.6 million in sales.
• 2023: TMTG posted a $58 million net loss on $4.1 million in revenue.

Yep. That’s a “cash balance larger than the total revenue it’s ever seen” kind of mess.

From MAGA Buzz to Money Pit

When TMTG hit the scene via a flashy SPAC merger with Digital World Acquisition Corp in March 2024, the buzz was electric. Truth Social was supposed to challenge Big Tech and create a digital haven for conservatives. Wall Street, understandably, jumped at the ticker. Despite the glitz, reality bit hard. Weak accounting, ballooning losses, and a turbulent tech sector meant the honeymoon was short-lived. CEO Devin Nunes claimed internal controls were "reasonably assured" just weeks ago, only to backpedal after an internal review. Awkward.

Let’s not forget: Trump’s auditing firm, BF Borgers, was banned by the SEC in May 2024 for “massive fraud.” That same firm audited TMTG. Investors, connect the dots. Even as it fumbles with financials, TMTG is “stepping up its game” with new ventures like Truth. Fi, crypto partnerships, and retail investment tools via deals with Crypto.com and Yorkville America Digital. But here’s the kicker: regulators are already raising eyebrows over possible conflicts of interest.

What Financial Professionals Should Know

This isn’t just a Trump Media problem, it’s a cautionary tale for every founder, CFO, and investor out there.

• Material weaknesses signal:
• Inadequate leadership oversight
• Lack of compliance culture
• High risk of financial restatements

And if you’re a finance pro thinking this can’t happen to your firm, think again. According to footnoted editor Michelle Leder: “It’s often a precursor to an earnings restatement.” The smart money move? Nail down your internal controls before the IPO champagne even pops. Prioritize hiring experienced SEC reporters. Get those audits airtight. Because when controls collapse, so does market trust, and that’s harder to rebuild than revenue.

Will TMTG Walk the Walk?

TMTG has made the right noises, bringing in more qualified staff, hiring third-party consultants, and pledging remediation by 2025. But whether that’s a real fix or just duct tape remains to be seen. Meanwhile, the geopolitical backdrop is shifting. A fragile U.S.-China tariff truce, the return of Trump to the global stage, and 2025 election jitters all mean that companies need to be watertight, financially and strategically. Because in a market this volatile, you don’t just need good headlines. You need good books. Want spicier takes on financial shakeups? Subscribe to our newsletter and stay ahead of the drama behind the data.