Trump Media & Technology Group Faces a Rollercoaster Year Ahead
Trump Media & Technology Group (NASDAQ: DJT), the owner of Truth Social, made its public debut through a special purpose acquisition company (SPAC) merger on March 26, 2024. The stock opened at an impressive $70.90 but plummeted to a low of $12.15 on September 23, before currently trading around $34. Analysts are now speculating on its future trajectory in a volatile market.
Exploring Trump Media’s Revenue Streams
Truth Social is Trump Media’s primary asset, yet the company does not share important metrics like monthly active users (MAUs) or average revenue per user (ARPU). Unlike its competitors such as Meta Platforms, these details remain undisclosed.
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Data from Similarweb reveals that Truth Social had 76,463 daily active users (DAUs) in the U.S. as of May 19, 2024, averaging 4 million monthly visits from May 2023 to April 2024. For comparison, Meta reported 3.29 billion daily active users (DAP) across its platforms like Facebook, Instagram, Messenger, and WhatsApp.
The primary revenue model for Truth Social is similar to that of Meta, relying heavily on digital advertising. However, the financial performance of Trump Media tells a different story. In 2023, the company reported just $4.1 million in revenue with a staggering net loss of $58.2 million. The first three quarters of 2024 saw revenue of $2.6 million alongside an expanded net loss of $363.2 million.
As of the end of the third quarter of 2024, Trump Media reported $372.1 million in cash and equivalents. Much of this is expected to be invested in the development of its new streaming service, Truth+. This venture is expected to require significant capital, likely accelerating cash burn and further increasing net losses.
Despite these challenges, Trump Media holds a striking market cap of $7.4 billion, representing a shocking 1,850 times the previous year’s revenue. The company is currently viewed as a meme stock, leveraged more by political narratives than by any real advancements in business performance.
The Investor Landscape: Why Are They Supporting Trump Media?
Investors appear undeterred by Trump Media’s high valuation. Three main groups are likely driving stock trades. First, short-term traders capitalize on the stock’s significant price volatility. Next, some of President-elect Donald Trump’s supporters continue to buy or hold shares, reflecting their backing for his administration. Notably, Trump himself remains a major player with a $4 billion stake in the company.
Lastly, speculative investors seem to bank on potential growth, hoping Trump Media evolves into a notable player in social and streaming media. There have been rumors about possible mergers with other platforms, including talks with Elon Musk’s X and the right-leaning streaming service Rumble, as well as discussions about acquiring the crypto trading platform Bakkt.
Recently, Trump transferred all his shares in Trump Media into a revocable trust, which does not designate him as the top shareholder anymore. This move may signal his intention to sell some of his stakes in the future.
Forecasting the Future of Trump Media’s Stock
The next 12 months for Trump Media’s stock seem bound to volatility. As the initial excitement around the election fades, investors might refocus on broader economic challenges and high interest rates.
This shift could lead to a significant drop in stock value, with potential losses exceeding 90%. Given its current financial footing, Trump Media might soon find itself overvalued relative to its earnings. Thus, while the stock may continue to fluctuate, it could ultimately lose momentum and disappoint those chasing post-election gains.
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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sibling of Meta Platforms CEO Mark Zuckerberg, is on The Motley Fool’s board of directors. Leo Sun has holdings in Meta Platforms. The Motley Fool holds positions in and recommends Meta Platforms. The Motley Fool adheres to a disclosure policy.
The views and opinions expressed here are solely those of the author and do not reflect the views of Nasdaq, Inc.
