Investors Eye Trump Media and Rumble as Election Approaches
As the election date nears, investors are focusing on stocks likely influenced by the outcome. Among them are Trump Media & Technology Group (NASDAQ: DJT) and Rumble (NASDAQ: RUM).
Understanding Each Company: Trump Media and Rumble
Trump Media is the parent company of Truth Social, a social media platform launched after the former president’s removal from Twitter during the January 6 crisis at the U.S. Capitol. This year, Trump Media went public via a special purpose acquisition company (SPAC) and has experienced substantial stock volatility. For many investors, the company’s stock serves more as a reflection of Trump’s political chances than a true business investment.
Meanwhile, Rumble operates as a right-wing alternative to YouTube and is similarly sensitive to election developments and Trump’s status.
Business Models: A Closer Comparison
Trump Media’s core business revolves around Truth Social, a platform designed to favor free speech. The company also launched Truth+, a new streaming service. Although the specific number of monthly users for Truth Social isn’t reported, SimilarWeb estimates it received around 4 million visits from May 2023 to April 2024.
In contrast, Rumble primarily makes money through advertising. It reported 53 million monthly active users in the second quarter. Additionally, Rumble has ventured into cloud services, challenging tech titans such as Amazon and Microsoft. While still a smaller part of its revenue, Rumble Cloud demonstrates how its services can complement its video platform.
Financial Performance: Trump Media vs. Rumble
Despite its media attention, Trump Media’s financial performance is lackluster. In the second quarter, it recorded $836,900 in revenue, a decline from $1.19 million a year prior. The company also reported an operating loss of $18.7 million, largely due to significant administrative expenses, likely including management salaries.
Conversely, Rumble brought in $22.5 million in revenue during the same period but saw a dip from $25 million the previous year. Rumble also suffers losses, reporting an operating deficit of $38.8 million.
Valuation: Which Company Holds More Value?
Trump Media’s market capitalization stands at $8 billion, despite minimal revenue, placing it alongside well-known media firms like New York Times Company and Paramount Global. This high market cap suggests it may be substantially overvalued considering its financial fundamentals.
On the other hand, Rumble has a price-to-sales ratio of 14.2, which, although steep, appears more justified when considering Trump Media’s valuation. Rumble’s current market cap is $1.6 billion.
Making the Investment Decision
Supporters of Trump Media argue that its stock could rise significantly if Trump wins the upcoming election. However, it remains unclear how a Trump victory would tangibly benefit the company. If he returns to office, it might attract more advertising as businesses seek favor with him.
Yet, ongoing operational struggles could hinder Trump Media, leaving investors without the boost they might expect from an election win. This scenario might resemble a “buy the rumor, sell the news” situation.
Conversely, Rumble represents a more established business and could potentially gain advantages from Trump’s election. Increased traffic and ad revenue may follow if Trump returns to the presidency.
Overall, while both stocks appear overvalued based on recent quarterly performance, Rumble stands out as the more viable investment at this time.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Microsoft, and The New York Times Co. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
