Trump Media & Technology Group Corp. (NASDAQ: $DJT) is a technology and media company based in Sarasota, FL that is majority owned by former US President Donald Trump. It went public towards the end of March 2024 via a SPAC and is behind the Social media network Truth Social.
Trump Media Shares Sink
On April 1, Trump Media shares lost over 21% of their value after an SEC filing revealed losses of nearly 60 million against a revenue of around $4.1 million.
The filing cites an analysis from an independent accounting firm, BF Borgers CPA PC, which found that the company’s operating losses raise doubts “about its ability to continue as a going concern.” The note from Borgers is dated March 25, a day before Trump Media went public on the NASDAQ.
When contacted for comments, a Trump Media spokesperson referred to a press release from CEO Devin Nunes. In the press release, Nunes states that Truth Social has “no debt and over $200 million in the bank, opening numerous possibilities for expanding and enhancing our platform.”
In its filing, Trump Media states it expects to continue operating at a loss as it works to expand the user base and attract advertisers. According to the filing, Trump Media has around $2.6 million in cash and total liabilities of around $70.1 million. The merger infused around $300 million into the company.
Trump’s Net Worth Declines
Trump Media went public towards the end of March 2024, bringing Trump’s net worth to $7 billion. However, the former president is barred from selling the stock for the next six months. According to an analyst at NewEdge Wealth, Ben Emos, if Trump were to sell his stock, “it could sink DJT by at least 15% to 40% based on option pricing.” Following the latest share price loss, Trump’s net worth is down around $1 billion.
Trump Media Stock Performance
At the close of trading on Monday, April 1, DJT shares were down 21.47% at $8.66 per share. A few minutes after the opening bell on Tuesday, April 2, 2024, the shares were down 1.83% to trade at $47.77 per share.
Over the past 52 weeks, DJT shares, formerly trading under the DWAC ticker, have lost 16.11% of their value, compared to the 27.88% gain of the S&P 500. They are currently trading at a significant discount to their 52-week high of $79.38 and below their 50-day, and 200-day moving averages of $59.36 and $59.36, respectively. They have an average 10-day trading volume of 30.73M, with 113.48M shares outstanding.
Analysts Forecast Volatility
In the medium term, analysts forecast high volatility for DJT stock amid Trump’s legal and political turmoil. A researcher at Morningstar, John Rekenthaler, likened DJT stock to crypto.
According to Rekenthaler, people buy DJT stock because they expect its price to rise and feel an affiliation with it. He added, “Bitcoin owners are members of a club. So, too, are Trump Media investors, to an even greater degree. For them, DJT shares represent a currency by which they can express their beliefs and commitment.”
IS DJT Stock A Buy?
TMTG has one of the highest multiples of any social media company. According to its most recent figures, it is trading at a Price to Sales ratio of 1,050 and an Enterprise Value to Revenue ratio of 1,210.
With around 5 million monthly active users, it pales compared to its peer, Twitter, which has around 500 million monthly active users. It is also a much riskier option, with the latest independent audit report indicating it may not continue to be a going concern due to its debt levels.
However, since it went public, it has gained momentum as a meme stock, becoming one of the most popular stocks on the r/WallStreetBets subreddit. Due to the high risk of the stock, DJT is not a great long-term investment. However, holders could see huge gains in the short term, driven by characteristic meme stock trading activity.
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