Trump Media's Stock Plummets: Investors Should Avoid It

A recent report reveals Trump Media and Technology Group's stock has seen a drastic decline due to missed growth targets and substantial losses, making it a risky investment for potential investors.

Date: 26-09-2024

AI Rating: 4

Stock Performance and Valuation

Trump Media and Technology Group (TMTG) has seen its stock price plummet from $70.90 to approximately $13, a decline of over 90%. The company's existing market capitalization is notably high at $2.5 billion, but it generated only $3.9 million in revenue over the past 12 months, equating to an astronomical valuation of more than 650 times trailing sales condition. This stark contrast to Meta Platforms' and Snap's sales multiples of 10 and 4 times, respectively, raises alarm over TMTG's financial sustainability.

Lack of Key Performance Metrics

The report highlights that TMTG does not regularly disclose key performance metrics such as Monthly Active Users (MAUs) or Daily Active Users (DAUs), making it difficult to assess its user base growth or potential. Comparatively, mainstream platforms like Meta and Snapchat provide extensive user engagement metrics, which TMTG significantly lacks, raising questions about its operational transparency.

Significant Losses

TMTG's financial distress is further exemplified by its reported net loss of $58.2 million in 2023, leading to a staggering loss of over $14 for every dollar earned. The first quarter of 2024 saw TMTG generate a mere $770,500 in revenue coupled with a colossal net loss of $327.6 million. Such figures signal desperate financial performance with no apparent path to sustainable growth.

Lock-up Period Expiration

The expiration of TMTG's six-month lock-up period on September 19 raises additional concerns. Insiders, including Donald Trump with substantial ownership, could potentially sell shares, further pressuring the stock price. Though Trump publically asserted no intention to sell, the adverse financial indicators could compel insiders to minimize losses by liquidating their holdings.

Meme Stock Status

The report categorizes TMTG as a 'meme stock,' driven more by trader speculation and political allegiance than by sound financial or operational business groundwork. If interest wanes among these groups, TMTG's valuation could dissipate even further.

Stocks: DJT