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Truth Social IPO

The recent IPO of Truth Social, Donald Trump's social media platform, has sparked significant attention due to its volatile stock performance. Scott Galloway highlights the extreme valuation of the company, trading at 1,500 times its annualized sales, which he describes as detached from reality 1. The stock's wild swings have led to trading halts, and Galloway warns investors to stay away due to potential underlying issues 2. He speculates that Trump's financial needs, including a $454 million civil fraud case, might drive him to find ways to extract cash from the company, possibly through a dividend payout to shareholders 3.

I wouldn't get near this thing right now because it has no basis in gravity or reality.

--- Scott Galloway

Such a move could be seen as a financial lifeline for Trump, but it raises questions about the company's sustainability and governance.

   

Board Governance

Truth Social's board governance raises significant concerns, particularly regarding its fiduciary responsibilities. Scott Galloway argues that any attempt to distribute cash as a dividend could trigger shareholder lawsuits, as it would not align with fiduciary duties given the company's financial losses 4. He suggests that the board's composition, including Trump's allies, might lead to decisions that prioritize personal interests over the company's viability. The involvement of major investors like Susquehanna, which also has ties to ByteDance, further complicates the governance landscape, hinting at potential conflicts of interest.

The dividend would solve some of its problems, but that's an automatic shareholder lawsuit.

--- Scott Galloway

These governance issues underscore the precarious position of Truth Social and its uncertain future.