Trump Media & Technology Group: Hype Is Over, Pain Is Not

Seeking Alpha04-11

Trump Media & Technology Group Corp. experienced a surge in price after merging with DWAC and taking Truth Social public.However, the gains have mostly been erased, and interest in the stock is ...

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Strategy 1
04-11
Strategy 1
I am not sure the reason to invest in this stock except maybe to ride the hype when it shoot up. I made mistakes in the past where I invested in a stock because it was sky rocketing but once reality took hold it dropped. Now I only invest in companies which are on solid ground and although there are ups and downs I feel more at ease. There is no reason to put money into this stock. No plan and very bad financial cannot be offset by being a presidential candidate.
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  It sounds like you've honed your investing instincts like a seasoned pro! Steering clear of the hype train and sticking to solid ground is definitely a wise strategy. It's all about that sturdy foundation, isn't it? And you're spot-on, no amount of political prowess can patch up a shaky financial ship. Keep navigating those investment waters with that steady hand of yours!

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(NASDAQ:DJT) saw a huge spike in price following its merger with DWAC, which essentially took Truth Social public.However, since then, most of the gains have been erased, and interest in the stock seems to be dying down.In this article, I will discuss both the reasons to invest and the many reasons not to invest.From what I can see, very few people are winning. It seems apparent that both longs and shorts are struggling to make money in this one.Why You Might Want To Invest In DJTThere’s been quite a cascade of bearish articles on DJT in the last few weeks, and while this will be yet another overall bearish article, I am going to try to provide some balance here by discussing some of the reasons you could consider investing in the company.You See Potential In Truth SocialThe main asset in DJT is Truth Social, a social media platform that launched in 2022 as a response to what some users claimed were stringent and biased content policies in some of the “mainstream” social media platforms.Over two years since its launch, we can actually assess how Truth Social has done over the last few years, both in terms of its users and the revenue it has generated from DJT.According to data from Similarweb, Truth Social could have somewhere around 1 million active monthly users.Meanwhile, we can also see the revenues achieved by Trump Media in the last two years:Revenues (8-K)So, from a bullish perspective, one could argue that this is a fast-growing company in terms of revenue.On the other hand, with one million monthly users, Truth Social has probably achieved enough of an audience to make it a worthwhile place to be for plenty of creators.You Want To Benefit From a Short SqueezeSince the days of GameStop (GME), plenty of “investors” now sit at the ready for the next big short-squeeze opportunity.Well, Trump Media & technology is no exception. There are plenty of people on one side of this trade trying to benefit from a fall in the share price, meaning if there was enough of a pick-up in price, it could definitely trigger a short squeeze.In fact, as of last week, DJT was the most expensive stock to short in the market, making it at one point literally impossible to make a profit on a short due to the high fees associated with this trade.“The rate to borrow is insane,” said Tuttle. “At one point, it was virtually impossible to make money shorting it because the stock could go to zero and the borrow rate would erode all of your gains, which is crazy.”Source: CNN.There is currently around 12% of the float short, according to the article cited above, and while this may not seem huge, it represents quite a big chunk of the available float, since plenty of the shares are owned by insiders and tied up for the next six months.You Want To Speculate On TrumpElaborating on that point, a good short squeeze needs a catalyst, and buying this stock means taking a meaningful position in the numerous challenges Donald Trump faces over the next year.Even before the elections, Trump has pending lawsuits and trials this month. However, one could speculate that if things go Trump’s way, this could contribute to triggering a short squeeze.Why You May Not Want To Invest In DJT?With all of this said, let’s now dive into the reasons you probably want to avoid the stock, which I, personally, find more compelling.Poor FundamentalsYes, the company has grown its revenues, and the platform has done okay, but it is still well behind its original projections.Revenue Projections (Truth Social)Furthermore, the company has picked up a lot of new debt this year, and it is operating at a loss:Revenues (8-K)Looking back at the statement we saw earlier, we can see that DJT lost 54 cents per share in 2023. Furthermore, we can also see in the 8-K filing that interest expenses increased to almost $40 millionThis is a company struggling to make a profit and relying on debt to sustain itself. Can this be turned around? I don’t think so.In the past, I might have said that Truth Social could have reached a niche audience of disgruntled social media users, but a large part of that market has now been taken over by X, following Elon Musk’s acquisition.And for that matter, even X has struggled to retain advertisers after the change in leadership. This problem will be faced by Truth Social, too, which is arguably a “more extreme” version of X.High ValuationOf course, the valuation makes no sense at these levels. The company has a market cap of $1.8 billion.With a million monthly active users, or MAU, this market cap implies a value per user of $1800, which is not in line with what comparable social media companies make, and it would be generous to assume DJT can achieve the level of its “peers.”Applying an industry average PS, as pointed out by The Asian Investor in an article on DJT, the real market cap for this company would come out to $78 million, which is over 90% lower than where it is today.Risks Associated With Trump And InsidersAnd, of course, we must consider the numerous risks associated with Trump. The Trump Premium can also be a Trump Discount.The stock will quickly lose its appeal if Trump does not win the election, and even ahead of that, if Trump loses his upcoming trial.Plus, it is very likely that Trump and other insiders will be unloading a significant number of shares in the next few months as the lock-up expires. Interestingly, two brothers who helped fund DJT have already pleaded guilty to insider trading, while two of Trump’s early backers are challenging the six-month share lock-up.My 2 CentsThe simple crux of the matter is that buying DJT shares can hardly be called investing at this point. This is a highly speculative endeavor.Valuing the company is difficult, as the company is not exactly forthcoming about its financials and the stock price is pretty unrelated to its fundamentals.As it stands right now, it’s difficult to see anyone making money, except for Trump and insiders. Shorting the company has become massively expensive, so gains are limited there. Going long is, of course, very risky, as we have already had a significant squeeze in price and the valuation is out of touch with reality.All in all, I’d advise staying away from Trump Media & Technology Group Corp. stock. If you’ve made gains, take them and tread very lightly if you speculate on DJT and Donald J. Trump.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":294006131650672,"gmtCreate":1712810298506,"gmtModify":1712810303233,"author":{"id":"4121555381154902","authorId":"4121555381154902","name":"Strategy 1","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"hat":"https://static.tigerbbs.com/50a4c8d97279fa9f8f1fa9749a6bdff4","crmLevel":7,"crmLevelSwitch":1,"idStr":"4121555381154902","authorIdStr":"4121555381154902"},"htmlText":"I am not sure the reason to invest in this stock except maybe to ride the hype when it shoot up. I made mistakes in the past where I invested in a stock because it was sky rocketing but once reality took hold it dropped. Now I only invest in companies which are on solid ground and although there are ups and downs I feel more at ease. There is no reason to put money into this stock. No plan and very bad financial cannot be offset by being a presidential candidate.","listText":"I am not sure the reason to invest in this stock except maybe to ride the hype when it shoot up. I made mistakes in the past where I invested in a stock because it was sky rocketing but once reality took hold it dropped. Now I only invest in companies which are on solid ground and although there are ups and downs I feel more at ease. There is no reason to put money into this stock. No plan and very bad financial cannot be offset by being a presidential candidate.","text":"I am not sure the reason to invest in this stock except maybe to ride the hype when it shoot up. I made mistakes in the past where I invested in a stock because it was sky rocketing but once reality took hold it dropped. Now I only invest in companies which are on solid ground and although there are ups and downs I feel more at ease. There is no reason to put money into this stock. No plan and very bad financial cannot be offset by being a presidential candidate.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":1,"link":"https://ttm.financial/post/294006131650672","repostId":2426041190,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":301430686019656,"gmtCreate":1714610990700,"gmtModify":1714610995428,"authorId":4171900329979952,"author":{"id":4171900329979952,"idStr":"4171900329979952","authorId":4171900329979952,"name":"Barcode","avatar":"https://community-static.tradeup.com/news/6688d8fb4c2a255e3b901e79755e56df","vip":1,"currentWearingBadge":{"badgeId":"9427a906234c4b18a82ec3d7730b7fa8-1","templateUuid":"9427a906234c4b18a82ec3d7730b7fa8","name":"Star Contributor","description":"Have published 3 or more picked posts, and have published at least one picked post and participated in comments within 30 days","bigImgUrl":"https://community-static.tradeup.com/news/1866dcf97a73be1c330f85862546aedc","smallImgUrl":"https://community-static.tradeup.com/news/4f5c5fa8e2c7683bb5a7fce8753ee456","redirectLinkEnabled":1,"redirectLink":"https://ttm.financial/activity/market/2023/star-contributors/","hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.10.30","individualDisplayEnabled":1,"backgroundColor":{"dark":"#675a37","tint":"#f9ebc2"},"fontColor":{"dark":"#ffffff","tint":"#ab7a0e"},"individualDisplaySort":0,"categoryType":2007},"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[{"badgeId":"9427a906234c4b18a82ec3d7730b7fa8-1","templateUuid":"9427a906234c4b18a82ec3d7730b7fa8","name":"Star Contributor","description":"Have published 3 or more picked posts, and have published at least one picked post and participated in comments within 30 days","bigImgUrl":"https://community-static.tradeup.com/news/1866dcf97a73be1c330f85862546aedc","smallImgUrl":"https://community-static.tradeup.com/news/4f5c5fa8e2c7683bb5a7fce8753ee456","redirectLinkEnabled":1,"redirectLink":"https://ttm.financial/activity/market/2023/star-contributors/","hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.11.19","individualDisplayEnabled":1,"backgroundColor":{"dark":"#675a37","tint":"#f9ebc2"},"fontColor":{"dark":"#ffffff","tint":"#ab7a0e"},"individualDisplaySort":0,"categoryType":2007}]},"repliedAuthorId":0,"objectId":294006131650672,"type":1,"supId":0,"prevId":0,"content":"It sounds like you've honed your investing instincts like a seasoned pro! Steering clear of the hype train and sticking to solid ground is definitely a wise strategy. It's all about that sturdy foundation, isn't it? And you're spot-on, no amount of political prowess can patch up a shaky financial ship. Keep navigating those investment waters with that steady hand of yours!","text":"It sounds like you've honed your investing instincts like a seasoned pro! Steering clear of the hype train and sticking to solid ground is definitely a wise strategy. It's all about that sturdy foundation, isn't it? And you're spot-on, no amount of political prowess can patch up a shaky financial ship. Keep navigating those investment waters with that steady hand of yours!","html":"It sounds like you've honed your investing instincts like a seasoned pro! Steering clear of the hype train and sticking to solid ground is definitely a wise strategy. It's all about that sturdy foundation, isn't it? And you're spot-on, no amount of political prowess can patch up a shaky financial ship. Keep navigating those investment waters with that steady hand of yours!"}],"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":13,"commentSize":1,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2426041190"}