Trump’s media and technology group (NASDAQ: DJT)The company, often shortened to Trump Media, is more controversial than any other publicly traded company. But if prospective investors can put their political leanings aside, there may be an opportunity.
Trump Media is the parent company of Truth Social and is primarily a media company, although it is a technology business of sorts. Its main rival is Elon Musk-owned X (formerly Twitter), but Truth Social’s competitors may soon include streaming platforms.
It’s not too late until the election is over
The concept of “too late” is difficult to define. In many cases, the stock price has already skyrocketed, suggesting a pullback is likely. In the case of Trump Media, the meteoric rise has already occurred and the backlash is underway, but there may also be a backlash underway.
In hindsight, it’s easy to conclude that the stock shouldn’t have risen that much in the first place. Trump Media’s rise to $79 per share on its first day of trading was likely due to a brief resurgence in meme stock enthusiasm, pent-up euphoria from its long-awaited reverse merger with Digital World Acquisition Corporation, and a lull. It is likely that this was based on the wishes of (At the time) the Fed was planning to cut interest rates multiple times this year.
At the very least, it is no exaggeration to say that the sudden rise in stock prices was not based on Trump Media’s financial situation. The company lost nearly $60 million last year on revenue of just over $4 million, according to recent filings.
To paraphrase Benjamin Graham and Warren Buffett, if the stock market is a voting machine in the short term and a weighing machine in the long term, then that machine rates the Trump media as a lightweight. It didn’t take long. As of market close on April 16, Trump Media stock had fallen to $22.84, its lowest closing price to date.
To further obscure the issue, it is difficult to assign a rating for the Trump media. Without profits, a company’s price-to-earnings ratio would not exist. Trump Media’s price-to-sales (P/S) ratio is a volatile target, as the stock price is highly volatile. However, as of this writing, the company’s P/S ratio is close to 1,000. Whether this number is useful or meaningful is debatable.
In any case, the concept of “too late” applies more appropriately at $79 per share than at current levels for Trump Media stock. Looking ahead, it’s not hard to imagine that stock prices will skyrocket if former President Donald Trump wins the next election. That possibility alone could give Trump Media stock a lifeline, or at least a price floor, until November.
It’s the platform that matters, not the president.
To be sure, the trajectory of Trump Media stock is not entirely dependent on President Trump taking back the White House. After all, Trump has many supporters, both as president and otherwise. It also ties in with Truth Social’s success (or failure) as a social media platform for populist voices.
Trump media received negative attention when the company filed to issue more than 21 million shares of stock. The stock price fell 18% on the news, and investors were understandably concerned about the prospect of diluting the stock.
In contrast, Trump Media’s press release the next day didn’t garner much attention (at least, judging by the buzz I saw on social media that week). In its press release, Trump Media revealed plans to roll out Truth Social’s content distribution network, which includes content streaming through apps for smartphones, tablets, home televisions and other devices.
Trump Media made no bones about the tone or intentions of the streaming platform. It provides an alternative medium for content creators and viewers who are deemed disenfranchised or excluded from mainstream platforms such as X. Provides “content that has been canceled, is at risk of cancellation, or is suppressed on other platforms or services.” . ”
If they gain traction, these types of platforms could generate significant revenue regardless of the outcome of the election. Of course, this is a big “assumption” on which the bullish argument is based.
Additionally, there will almost certainly be some volatility along the way, especially as Election Day approaches. While it may not be too late to buy Trump Media stock, these stocks are really only for speculators looking to bet on a binary event to occur in November. The future of Truth Social’s experiment in populist media is too uncertain for long-term investors.
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David Moadel has no position in any stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has a disclosure policy.
Is it too late to buy Trump Media & Technology Group stock?Originally published by The Motley Fool
