Trump Media & Technology Group Corp. (NASDAQ: DJT) has gained almost 30% since June 21 with the odds of a re-election of Donald Trump as President of the United States improving sharply. On June 27, Trump faced off with President Biden in the first Presidential debate this year, which, according to many experts, went Trump’s way. The results of the CNN debate watchers poll, conducted by SSRS, came in favor of Trump with 67% of voters believing Trump performed better than Joe Biden. The sluggish performance of President Biden has led to an uproar on social media platforms with many political analysts touting the possibility of Joe Biden withdrawing from the Presidential race. Amid these rumors, it seems high time to take Trump Media stock seriously as it is the parent company of Truth Social, the social media platform founded by Donald Trump.
The Broader Context
Truth Social, owned by Trump Media, is focused on providing users with a platform where they are able to express conservative opinions freely without some of the limitations associated with other social media platforms. The company earns revenue by monetizing the active user base by displaying advertisements but may consider offering subscription products that give users access to premium features. If Donald Trump wins the upcoming Presidential election, Truth Social is very likely to gain traction with Trump using the platform as one of his preferred social media handles to update the public. The platform will also have an opportunity to form strategic partnerships with other media outlets, driving user engagement higher and thereby positively impacting revenue growth.
What The Analysts Are Saying
Truth Social, despite attracting the attention of investors, is yet to gain traction from a financial performance perspective. The company reported a loss of $327 million in Q1 following a loss of $60 million in 2023, and the company management expects losses to continue in the foreseeable future amid greater profitability challenges. According to data from Similarweb, Truth Social’s monthly website visitors dropped to 3.9 million last April from a high of 9.8 million in August 2022. According to David Carr, Similarweb’s editor of insights, Truth Social may never be able to earn any profits because of its dwindling user base. Given the highly speculative nature of Trump Media, Wall Street analysts are not covering the company yet, which is a major warning sign for retail investors. A few months ago, Steve Sosnick, Chief Strategist at Interactive Brokers, commented that only political motivations are moving Trump Media stock, not company fundamentals.
Neither Dilantha DeSilva nor Stocks.News have positions in this company.
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Dilantha is a former buy-side equity analyst who now contributes to Seeking Alpha, GuruFocus, TipRanks, and ValueWalk. He is the founder of Beat Billions, a premium investment research subscription service on Seeking Alpha’s Marketplace. He has appeared on CNBC and Bloomberg to discuss stock markets and the global economy.