To The Moon

🌟🌟🌟There is never a dull moment investing in Meme stocks.  They rise and fall at a drop of a hat.

The most popular meme stock right now is possibly  $TRUMP MEDIA & TECHNOLOGY GROUP CORP(DJT)$ which just started trading on Tuesday.  It jumped more than 40% that day after DWAC completed its merger with Trump Media & Technology Group.

DJT is the Ultimate Trump stock as there is a lot of hype around it.  Donald Trump holds just under 60% shares of DJT.  

DJT closed at USD 57.99, up 16% on its first trading day.  However on Thursday  it closed at USD 61.96, a drop of 6.4% from Wednesday. 

The main product of Trump Media  is Truth Social.  In actual fact, Truth Social has been losing users.  Trump Media only generated USD 3.4 million of revenue through the first 9 months of 2023.  It lost USD 49 Million over that same period. 

In contrast $Reddit(RDDT)$ was only valued at USD 6.4 billion at its IPO last week.  Reddit generated USD 804 million in revenue in 2023 compared to Trump Media's annualised revenue of USD 5 million. 

Is DJT worth buying? 

It depends on whether you are a Trump supporter or not.  A group of Trump's loyal supporters have banded together on social media to lift the stock even before the merger with $Digital World Acquisition Corp(DWAC)$ was completed. 

According to some of them, they buy DJT mainly to show their support for Trump and his legal battles.   Teri Roberson from Texas said she purchased 5 shares of Trump Media at USD 72 per share  to show her support for Donald Trump.  She said she could not care less about the business fundamentals. 

Trump Media 's Nasdaq debut increased Trump's wealth by about USD 5 billion, though it is only on paper.  Cashing out the shares will not be easy. 

Trump Media has restrictions that prevent insiders from selling shares or using shares as collateral for loans for at  least 6 months.   However the Board of Directors could waive those restrictions if they need to.  If Donald Trump sells the shares, the share price may fall. 

Because Trump Media is based more on sentiment, not hard metrics like revenue and cash flow, it is difficult to anticipate whether the share price could rise or fall. 

Trump Media is reminiscent of $GameStop(GME)$ and $AMC Entertainment(AMC)$  hey days in 2021 when meme stocks were most popular. 

Since then, AMC is currently struggling to survive.  AMC's shares tumbled over 14% on Thursday when it announced another stock sale of USD 250 million to generate cash.  AMC is now trading at USD 3.72 per share, near its all time low. 

One thing certain is Volatility for $TRUMP MEDIA & TECHNOLOGY GROUP CORP(DJT)$  $Reddit(RDDT)$ and AMC.  These meme stocks are not for the risk adverse investor.  As for me, I would  stay clear of them as I prefer to invest in good quality stocks that tick all the core fundamentals of profitability, strong balance sheet and an excellent management team. 

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