Trump Media & Technology Group (NASDAQ:DJT) stock has been on one wild ride over the past 12 months. Initially trading as a SPAC under the DWAC ticker, and subsequently rebranded to DJT following the merger with Truth Social on March 22, the stock soared in meme-like fashion immediately following the merger, only to swiftly give most of those gains back to the market.
Last week was particularly topsy-turvy, with the shares falling on the news the company has filed to issue millions worth of stock, the result of which will be share dilution. Then the company announced it’s launching a new live TV streaming platform, but the shares fell again. The week then culminated with another violent move, this time upward.
So, what are investors to do with this volatile name now?
For thrill-seekers, or perhaps those less concerned about Trump’s attempts to undermine democracy, the stock might be appealing. Investor David Moadel even thinks that if “prospective investors can set aside their political leanings, there may be an opportunity afoot.” Moadel also contends that “It’s about the platform, not the president,” though this assertion might be stretching reality, given that Truth Social’s primary purpose is to provide Trump with a soapbox after he was banned from Twitter for repeatedly spreading lies about the 2020 election. Furthermore, the notion that the platform will serve as “alternative media for content creators and audiences perceived as having been disenfranchised or excluded from mainstream platforms” doesn’t quite hold water, especially since Trump and other prominent conspiracy theorists’ accounts have been reactivated on Twitter since Elon Musk took over.
But while Moadel has a forgiving stance regarding the platform’s intentions, one obvious red flag investors should be aware concerns the total lack of fundamentals supporting the current valuation. The stock’s market cap is currently just under $5 billion, and that is for a company that lost almost $60 million last year while generating only roughly $4 million in revenue. Due diligence won’t go far here either as no key performance indicators such as how many active Truth Social users there are, have been made public.
So, while Moadel thinks it “might not be too late” to buy Trump Media stock and he reasonably makes the case it is very probable the stock could soar should Trump win the November election, he concedes the shares are “really only for speculators seeking to wager on the binary event that will occur in November.”
Summing it up, Moadel concludes that the future of Truth Social’s venture into populist media remains too uncertain for those looking for stable, long-term investments. (To watch Moadel’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
