Trump Media & Technology Group Corp. (DJT), a conglomerate synonymous with the Donald Trump brand, has been struggling with mounting net losses and sluggish growth, eroding investor confidence. Fueled by Donald Trump’s presidential campaign and ultimate victory, DJT stock has been a lightning rod for volatility. The stock’s performance has veered wildly with every twist in Trump’s public and private narrative.
The latest update is the president-elect’s transfer of $4 billion worth of shares to a trust controlled by his eldest son, Donald Trump Jr. The soon-to-be president, who once held nearly 115 million shares, now owns none directly while remaining the trust’s sole beneficiary. This echoed Trump’s earlier approach during his first presidential term when a similar trust arrangement faced criticism.
Now, analysts and investors are left questioning whether this is a tactical masterstroke or a harbinger of instability. With the stock plummeting post-announcement, could that dip be an opportunity to buy or a warning to steer clear?
About Trump Media & Technology Stock
Founded in 2021, Florida-based Trump Media & Technology Group Corp. (DJT) burst onto the digital media scene through a headline-grabbing SPAC merger. With a market cap of $7.6 billion, the company operates Truth Social, a social networking platform offering a haven for free expression against Big Tech's alleged censorship, and Truth+, a streaming service featuring family-friendly content. TMTG’s mission to challenge tech giants and restore free speech has garnered both staunch supporters and fierce critics, reflecting the polarizing legacy of its founder and bold ambitions in the media space.
Despite slipping 54.9% from its March highs of $79.38, shares of Trump Media & Technology have rallied 104% over the past 52 weeks, eclipsing the broader S&P 500 Index's ($SPX) 27% surge.
A staggering 166% rally in just three months fizzled in November as election euphoria waned, with momentum slipping amid insider selling. SEC filings revealed that CFO Phillip Juhan, Director Eric Swider, and General Counsel Scott Glabe offloaded $16 million in shares after Trump’s victory. Additionally, speculation over Truth Social’s prospects and rumored crypto ventures like a move to acquire Bakkt (BKKT) added to the volatility.
From the valuation standpoint, DJT stock is priced at 1,583 times trailing sales, trading at a significant premium to the industry average.
Trump Media & Technology Dips After Q3 Results
On Election Day, Trump Media unveiled its Q3 earnings, and DJT stock slipped on Nov. 6. Net sales of just over $1 million marked a 5.6% year-over-year decline, while operating losses ballooned to $23.7 million from $3 million. General and administrative expenses surged to $17.7 million, reflecting elevated legal, software, accounting costs, and finance fees. The net loss hit $19.2 million, or $0.10 per share.
Despite the setbacks, TMTG maintains a solid financial position with $672.9 million in cash and no debt. Leveraging its balance sheet, the company aggressively expanded Truth+, its TV streaming platform, during Q3, launching a proprietary content delivery network, web access, native apps for iOS and Android, and integration with connected TV systems.
Truth Social platform initially emerged as a refuge for free speech, offering a space where users could engage without the restrictions of major social media platforms. Launched in early 2022, Truth Social quickly attracted attention as a counterpoint to the bans and restrictions placed on Trump after the Capitol riot in January 2021. The platform's early appeal lay in its promise to champion unfiltered expression.
However, the landscape has changed, with major platforms like Facebook, Instagram, YouTube, and X (formerly Twitter) lifting restrictions on Trump, reducing the need for a dedicated alternative. Truth Social’s engagement and monetization remain relatively low, with its new streaming service unlikely to contribute significantly until next year.
Trump Transfers $4 Billion to Trust
President-elect Donald Trump has moved his entire $4 billion stake in Trump Media & Technology into a revocable trust, transferring 114.75 million shares - 53% of the company. The trust, established in 2014, aims to streamline wealth transfer and reduce estate taxes. His son, Donald Jr., now controls the voting and investment power of the stock, though Trump retains indirect ownership.
Trump's move could stabilize investors despite the initial dip in stock price after the news. It ensures there won't be a mass selloff of shares while Trump serves in office, which could have destabilized the stock. Financial experts like Alex Beene suggest that the trust limits Trump’s ability to manipulate his shares while safeguarding against market volatility.
Kevin Thompson, a finance expert, sees the transfer as a strategic estate planning move, ensuring continuity and a seamless transfer of assets if anything were to happen to Trump. This could help avoid delays or complications, making it a sound decision for long-term stability.
Moving forward, Thompson notes that this move could signal a shift in strategy as Trump leverages his brand for financial gain. With Truth Social’s stock closely tied to Trump’s influence, the company's future and valuation remain tied to his strategic decisions, not just its business fundamentals.
Trump Media Faces Uncertain Future
Trump Media & Technology is facing a reality check. While the company has time to improve its offerings, its current valuation feels more uncertain by the day. With declining sales, rising costs, and limited revenue growth, its future seems shaky. Despite having a healthy cash reserve, the company’s losses are growing, making investors and analysts question how it plans to scale.
The valuation, in particular, raises eyebrows. The company’s enterprise value surpassed $7 billion, yet it generates less than $4 million in annual revenue. And with revenue trends heading south and cash losses mounting, the outlook isn’t optimistic.
For now, Trump Media’s stock largely swings with headlines, making it a bit of a meme stock. But headlines can’t keep a company afloat forever, especially when the fundamentals are weak. Truth Social and the Truth+ streaming platform are under immense pressure to deliver, but without significant revenue growth or a surge in users, the company's valuation feels unsustainable. Until those pieces fall into place, Trump Media might struggle to justify its lofty valuation.
