The success of Trump’s SPAC is totally dependent on delivering content

On Dec. 6, Digital World Acquisition Corporation or DWAC, the SPAC merging with President Trump’s new media company, included a presentation to investors in an SEC filing (scroll down the bottom of the filing). One of the graphs, if not the most important, is the last one showing revenue projections from 2022 to 2026. The reason it is so important, in addition to estimating revenue, users, and average revenue per user, or ARPU, is that it helps justify a stock price that has skyrocketed since the announcement of the merger.

In the last slide titled “Revenue Projections” there are assumptions for TRUTH Social, the Twitter-style social media site, and TMTG+, a subscription service similar to Netflix or FOX Nation, an offering that I think should be included. The slide contains an estimate of the number of users or subscribers, how many could be monetized for TRUTH Social, and the ARPU for both offerings. The chart also shows how much total revenue it would generate.

TRUTH Social does not generate much revenue

TRUTH Social seeks to attack social media sites such as Facebook/Meta and Twitter. From zero users, he predicts 16 million next year, rising to 81 million in 2026. As a benchmark, the first tweet was March 21, 2006, and it took five years to reach 85 million users. Twitter currently has around 400 million total users, of which 211 million are monetized, or 53%. Note that only 37 million out of the 211 million, or 18%, are monetized in the USA

TRUTH Social plans to only monetize 5% of its users in 2022, but that jumps significantly to 25% in 2023 and stabilizes at 26% from 2024 to 2026. This means that Truth Social would monetize the equivalent of 49% of Twitter. US monetization rate.

It plans to start generating revenue from the service in 2022 at $5.90 per monetizable user and grow to $13.50 in 2026.

The chart in the investor presentation only shows $1 million in revenue in 2022, with all of it coming from TRUTH Social. It looks like TRUTH Social won’t generate any revenue until the very end of the year.

Looking to 2026, TRUTH Social expects to have 21.1 million monetizable users at $13.50 per user by the end of the year. Using an average of total users between 2025 and 2026, percentage monetized, and ARPU, TRUTH’s revenue would be $258 million for the year.

Total revenue in 2023 is expected to be $114.1 million and $3,665.3 million in 2026. As a percentage of TMTG’s total revenue, TRUTH Social would be approximately 26% in 2023, falling to 7% in 2026. Its growth is expected to slow from 326% in 2024 to 23% in 2026.

TMTG+ will need a lot of content to support the load

With TRUTH Social only providing 7% of TMTG’s total revenue in 2026, TMTG+ will need to provide licenses and create content. And there must be many.

TMTG+ plans to create a recurring revenue business similar to Netflix or, I believe, something similar to FOX Nation, because studio-delivered shows cost less to produce than one-off series or feature films. Studio shows are also much easier to edit if they don’t provide the engagement that will be needed.

TMTG+ does not expect paid subscribers until 2023, when it will start with 4 million. It then forecasts growth to 40 million by 2026. As a benchmark, Netflix was founded in 1997 and started its streaming business in 2007. It took six years, until 2013, to have 40 million subscribers. paying and he had a huge client. base to use.

Note that Netflix averaged about 70 million paying subscribers in the United States in 2020, which generated $11.46 billion in revenue. This equates to $13.64 per month per subscriber.

TMTG+ projects that it can charge $5.56 per month per subscriber in 2023 and increase that amount to $9.00 in 2026.

This translates to $67 million in revenue in 2023 (using the average of the assumptions for the years 2022 and 2023) and $3.2 billion in 2026. That’s a big hill to climb; especially when you don’t know what content it will offer and how good it will be.