It might not be the Official Trump crypto coin, but investing in Trump Media & Technology (DJT 0.53%) is probably the best way to play the increased media exposure around all things Donald Trump now that he's president again. Surprisingly, the stock has been relatively stable since the Nov. 5, 2024, election and it's been down since the Jan. 20 inauguration. The stock seemed to move in tandem with his prospects of winning before he was elected, but the catalyst driving the share price now seems unclear.
Based on conventional valuation metrics, the stock now looks grossly overvalued, but the president's role in the platform and his large base of followers make it unique.
Is Trump Media a buy? Let's take a closer look at the company and its prospects before answering that question.
Image source: Getty Images.
What is Trump Media?
Trump Media's primary asset is Truth Social, the Twitter-like social media platform Trump started when he was kicked off of Twitter following the Jan. 6, 2021, riots.
It's unclear how many actual users Truth Social has, but its revenue is negligible. It brought in $1 million in revenue in the third quarter and reported an operating loss of $23.7 million, which includes $12.1 million in legal fees related to its licensing rights to use streaming media platform Perception Group's network.
Trump Media also launched its streaming network, Truth+, in the third quarter, and released apps for iOS, Android, and several connected TV platforms. Management envisions Truth+ like the rest of the business as a platform that embraces free speech, saying, "Free speech lives on Truth+, where you can watch the news you trust and shows and movies that Big Media has tried to blacklist." Still, it doesn't seem like Truth+ has gotten much attention since being launched.
The company is well capitalized with $372 million in cash and an additional $300 million in short-term investments. It has just $21 million in total liabilities.
Can Trump Media become a viable business?
Typically, a stock generating $1 million in revenue a quarter and losing $23.6 million would be uninvestable, but the president's connection to Trump Media makes the company unique. Despite that connection and Trump's growth in power and presence, Trump Media's best prospects may already be behind it. The Truth Social app got a lot of coverage when it first launched in February 2022, and monthly downloads peaked at 1.2 million in April 2022. In November 2024, monthly downloads were less than 500,000.
The business itself has struggled to grow since Truth Social launched, and revenue actually declined year over year in the third quarter.
Social media is a difficult industry, and only a few apps build the scale necessary to turn a profit. Truth Social, with just $1 million in quarterly revenue, has struggled to build a large enough user base to make the app attractive to advertisers.
Despite the Trump name, the platform has been unable to gain traction.
Is Trump Media a buy?
In addition to its struggles to generate meaningful revenue and its ongoing losses, the stock also trades at an unreasonable valuation based on fundamentals.
The stock is currently valued at a market cap of $7.3 billion, which is hard to justify even with the premium attached to President Trump. It's unclear what the president could do for the company that he hasn't already, and while he is the majority shareholder of the company, now through a trust, he doesn't have day-to-day involvement with the company.
For the near term, expect the stock to trade as an avatar for the Trump presidency and his reputation, but it can't be considered a real long-term investment buy, given its bloated valuation and lack of material revenue.
