How to Invest in Truth Social

Trump Media & Technology Group (DJT 7.92%), or TMTG, owner of Truth Social, got off to a roaring start as a public company. Shares of the social media platform formed by former President Donald J. Trump soared about 50% at one point on its first day of trading in early 2024, valuing the platform at almost $8 billion. As the majority shareholder, Trump's stake in Truth Social was worth nearly $5 billion shortly after its public debut.

The initial pop in the platform behind Truth Social likely has many of the former president's fans wondering if this company is a good investment. Here's everything you need to know about how to invest in stocks like Truth Social, including the way it completed an initial public offering (IPO).

Is it publicly traded?

Is Truth Social publicly traded?

Truth Social became a publicly traded company in late March 2024, when it started trading on the Nasdaq Stock Exchange under the stock ticker DJT (the initials of the former president). It took a rather unique (and winding) path to become a publicly traded company.

In October 2021, Trump Media & Technology Group (TMTG) agreed to merge with Digital World Acquisition Corp, a special purpose acquisition company (SPAC) that had gone public via an IPO in September 2021, to complete business combinations with one or more technology-focused, market-leading companies. After many delays, Trump Media & Technology Group completed its business combination with Digital World Acquisition Corp on March 25, 2024. Trump Media & Technology Group, which owns Truth Social, started trading under its new stock ticker (DJT) the next day.

IPO date

When will Truth Social IPO?

Truth Social completed its move to the public markets only a day after platform's parent company, Trump Media and Technology Group, completed its business combination with SPAC Digital World Acquisition Corp on March 25, 2024. The company started trading on the Nasdaq Stock Exchange the following day under the stock symbol DJT.

How to invest

How to buy Truth Social stock

Now that Truth Social's parent company, Trump Media and Technology Group, has completed its business combination with Digital World Acquisition Corp, anyone can buy shares in the company.

However, you'll need to take a few steps before buying its stock. This four-step guide will show you how to add the social media stock to your portfolio:

Step 1: Open a brokerage account

You'll have to open and fund a brokerage account before buying shares of any company. If you need to open one, here are some of the best-rated brokers and trading platforms. Take your time researching the brokers to find the best one for you.

Step 2: Figure out your budget

Before making your first trade, you'll need to determine a budget for how much money you want to invest. You'll then want to figure out how to allocate that money. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years.

You don't have to get there on the first day, though. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.

Step 3: Do your research

It's essential to thoroughly research a company before buying its shares. You should learn about its competitors, review its balance sheet, find out how it makes money, and consider other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term.

As noted, an important part of investment research is looking at a company's competitors. Here are three publicly traded Truth Social competitors that investors should also thoroughly research before investing in the social media company's stock:

1. Meta Platforms (Facebook)

Meta Platforms (META 0.43%) is the biggest social media company in the world. Meta owns four of the seven largest social media platforms by monthly active users (Facebook, WhatsApp, Instagram, and Facebook Messenger), led by Facebook at 3 billion. The social media giant generated a staggering $134.9 billion in revenue in 2023 (mostly from advertising). It was also highly profitable ($39.1 billion of net income).

2. Reddit

Reddit (RDDT 7.02%) went public shortly before Truth Social. It's a much larger platform with about 73.1 million daily active users and 267.5 million weekly active users. The company generated $804 million in revenue in 2023 (up from $666.7 million in 2022). However, it wasn't yet profitable, posting a $90.8 million loss in 2023.

3. Pinterest

Pinterest (PINS 4.04%) ranked as the 15th-largest social media platform in early 2024, with about 482 million monthly active users. The platform generated more than $3 billion in revenue during 2023 (up 9% from 2022). However, it wasn't yet profitable ($35.6 million net loss).

Step 4: Place an order

Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:

• The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
• The stock ticker (DJT for Trump Media and Technology Group).
• Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price.

Here's a screenshot of how to buy a stock with the five-star-rated platform Fidelity (which offers a video tutorial and a step-by-step guide):

Once you complete the order page, click to submit your trade and become a shareholder of the former president's Truth Social.

Profitability

Is Truth Social profitable?

Researching a company's profitability is a crucial step before buying its stock because profit growth tends to drive stock price performance over the long term. Ideally, you'll want to see a company delivering growing profitability -- or at least on the path toward making money.

As of early 2024, TMTG wasn't yet profitable. The company generated only $3.4 million in revenue during the first nine months of 2023. Meanwhile, it racked up $10.6 million in operating losses.

It's not surprising that Truth Social isn't yet profitable. It has only been operating for a few years. More established social media platforms like Pinterest and Reddit still report operating losses many years after they started.

The company's losses aren't a problem in the short term because the business combination with Digital World Acquisition Corp infused it with about $300 million in cash to fund the platform's operations and expansion.

However, the company will eventually need to generate significant revenue and profits to fund its operations and justify its lofty post-IPO valuation. If it doesn't, shares could lose much of their value.

Should I invest?

Should I invest in Truth Social?

You'll need to determine whether Truth Social is the right investment for your situation. Here are some factors to consider that might lead you to buy its stock:

• You are a big fan of Trump.
• You believe his social media platform will see tremendous user, revenue, and earnings growth in the future.
• You're an active user of Truth Social and prefer it to other social media platforms.
• You understand the risks of investing in IPO stocks, including the fact that they can be very volatile.
• You think advertisers will begin to flock to Truth Social as Trump's election campaign ramps up.
• You believe that if Trump is elected again, it would provide a significant boost to his social media platform.
• You are comfortable with Truth Social's valuation and believe it can grow into its lofty post-IPO value.

On the other hand, here are some reasons why you might opt against investing in Truth Social:

• Trump's values don't align with yours.
• You don't use Truth Social.
• You're concerned about the company's lofty valuation.
• You're worried that Trump's political views could scare advertisers away from the platform.
• You're concerned a Trump election loss could hurt Truth Social's valuation and growth prospects.
• You think many potential users and advertisers will opt for the much larger X platform that Elon Musk owns.

ETFs

ETFs with exposure to Truth Social

Many people would rather be passive investors than actively invest in specific companies. Exchange-traded funds (ETFs) make that easy. Many ETFs enable you to gain passive exposure to a company or theme.

As a newly minted public company as of early 2024, TMTG wasn't yet eligible for the indexes most ETFs track, so you can't gain passive exposure to the social media platform. However, that could change if the company starts to meet the eligibility requirements of indexes that ETFs track.

Meanwhile, investors have some alternative ETF options they could consider. Here are two ETFs that stand out as potential options:

• Renaissance IPO ETF (IPO 2.16%): This ETF focuses on newly public companies. It rebalances each quarter, cycling out companies three years after completing their IPOs with newly listed ones. It had 59 holdings as of early 2024. The fund enables investors to hold a portfolio of relatively new public companies for a fairly reasonable ETF expense ratio of 0.6%.
• Global X Social Media ETF (NYSEMKT:SOCL): This fund focuses on companies that operate social media platforms. In early 2024, it held 43 stocks. The fund offers broad exposure to the social media space for a reasonable expense ratio of 0.65%.

Related investing topics

The bottom line on Truth Social

Truth Social soared in its public market debut in early 2024, driven by its growth potential and the link to the former president. Those catalysts likely have many people interested in the stock.

However, given the controversy surrounding Trump, the platform isn't for everyone. The company has a very high valuation, given the current size of its user base and revenue. It's also still losing money. Because of those concerns, you must carefully consider the risks before investing in its stock.

FAQ