Grift vs Insider Trading? | New Revenue Stream at Trump’s Truth Social
$1.2M per year to get Trump's Truth Social posts a little faster....
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Last week, Trump Media (public company that owns Truth Social) announced “Truth API”, which will give customers access to the 10 most “influential” Truth Social accounts in milliseconds, which is faster than everyone else will get the posts.
The Price? reportedly as high as $100,000 per month…
The Target Customers? Hedge funds, banks and big trading firms that are dealing with billions of dollars
The Pitch? Simple…Trump posts crazy stuff that moves markets in major ways so if these firms can get the posts faster, their automated trading algorithms can buy/sell faster (which matters a lot). Also, if they don’t buy it then they are going to be behind other traders (which will cost them lots of money).
Trump’s post (aka “Truth”) about pausing tariffs last year would probably have paid back the $1.2M annual price tag by 100x+ in just a couple of hours for many of these trading firms…
At 1:18 pm on April 9, 2025, Trump posted about a tariff pause and the stock market immediately jumped by ~7-9%. The Nasdaq finished the day 12.2% higher and the S&P 500 9.5% higher.
Imagine being a trading firm not paying to get this info slightly sooner and missing out on one of the largest single-day gains in history.
Obviously, this wouldn’t be for normal retail traders because most investors can’t act on the news (buy/sell) fast enough for the timing difference to matter. But the shops that have spent millions of dollars to automate trades based on the speed of information have to buy this…there is almost no choice.
I am not a lawyer, but apparently there is nothing illegal about this… It is not insider trading, and apparently the President is exempt from the conflict of interest laws that would have prohibited other government officials from doing the same thing.
Does it pass my general ethics sniff test? obviously not…
Unprecedented Levels of Grift
Truth Social isn’t the first social media app to sell faster access to posts, but…
Insane price: $100,000 per month for faster access to the top 10 Truth Social accounts (really everyone just cares about the one that actually moves markets on a regular basis). This is ~100,000%+ higher than what would normally be charged by any other similar service on a per-post basis.
It’s for posts from the President of the U.S.: Many of Trump’s posts move markets in major ways and he posts them first on Truth Social.
Trump owns 41% of Truth Social: More frequent (and market-moving) posting by the president on Truth Social can make him a lot richer because more people will be pushed to buy these $100,000 subscriptions. Because of this financial relationship, Trump obviously financially benefits whenever he posts market-moving things…
And even crazier is that this “Truth API” will probably make up the majority of the company’s revenue by next quarter.
Trump Media only generated $871K in Q1, or $290K a month. What?!? lol. It would just take three customers at the $100K price tag for it to become the majority of its revenue.
Remember, this company has a $2.7 billion enterprise value (once nearly $10 billion)…off of basically no revenue. Nearly the entire valuation is tied to the President of the U.S. and this new product is doubling down on that. There is a limited amount of time (2.5 years) to milk Trump’s presidential status and they are shamelessly going for it.
Is “Truth API” ARR (recurring revenue)?
Well, it’s a monthly/annual subscription that is probably expected to renew for at least a couple of years. But unless Trump gets a 3rd presidential term 🤣…basically everyone will churn in about 2.5 years.
Funny enough though…I think a lot of software companies are in a similar position (ie revenue is no longer very durable) but they don’t have as clear of a churn date.
Definitive churn in 2.5 years breaks the objective of “ARR”. ARR was magical because of its durability. The business model looks much different if “ARR” only lasts a couple of years. LTV metrics will look amazing for 2.5 years…until a wall of churn hits.
Rationally, then, investors would only value this incremental revenue potential based on the temporary FCF increase from it for the next couple of years. But…that would assume whoever owns Trump Media is “rational”.
*Some reports say they are offering discounted prices of $60K per month if customers commit to at least 3 years. I wonder why…🤔. Oh yeah…the only reason people will buy the subscription will no longer matter in 2.5 years.
What Counts as Insider Trading?
Insider trading occurs when three things happen:
The trader has material, nonpublic information about a security.
The trader buys or sells securities while aware of it.
The information was obtained or disclosed through a breach of a fiduciary duty, confidentiality obligation, or similar duty of trust.
Paying for faster access to information is not necessarily insider trading. For example, Bloomberg Terminals, which cost a lot of money, provide a speed advantage, but that doesn’t trip insider trading rules. People are just paying for a faster connection.
Ok, What About Regulation FD?
Regulation FD (“fair disclosure”) is 26 years old and basically says companies must simultaneously disclose information to the public. Meant to protect retail investors from companies sharing material information with analysts in advance of everyone else.
But Reg FD doesn’t apply here because:
The information Trump is posting about is not about Trump Media.
Reg FD governs disclosures of material nonpublic information about that company. Trump’s posts about tariffs, wars, interest rates or foreign policy may move many securities, etcThe API accelerates delivery of published posts but does not provide unpublished information.
The API feed will deliver posts faster than ordinary push notifications. If the post is already publicly posted and the API just transmits it faster, there is no nonpublic information to regulate.
TLDR: the laws did not contemplate this insane situation… or at least assumed lawmakers would never need to make something like this illegal.
Takeaway: Be Honest and Ethical
I don’t know all the facts on this Truth Social API subscription, but it certainly looks very ethically questionable based on the facts we have (even if not illegal) - creates information asymmetry with retail investors and creates a crazy financial incentive for the U.S. president.
My reminder for business leaders: perform the front-page newspaper ethics test:
Would you be comfortable with your decision if SEC lawyers, your board, your mom, etc. knew about it?
Whether it’s questionable ARR definitions, manipulating timing of customer churn to look better in fundraising, not being honest about potential product incidents in due diligence, etc….
Do a front-page newspaper test and make sure your decisions will pass it.
Footnotes:
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*Nothing in this post should be considered tax, legal, or investment advice. Educational purposes only. Consult an investment and/or tax advisor.