Trump Media Outlook: Is DJT Stock Worth Trading Ahead of the Election?

Despite its high-profile debut, Trump Media & Technology (NASDAQ:DJT) has continued to report significant financial struggles. In Q1 2024, the company posted a $12.1 million operating loss, including $6.3 million for one-time merger payments. Even excluding these one-time events, overall losses remained high at $327.6 million, largely due to non-cash expenses. The company generated just $770,500 in revenue, highlighting severe financial challenges and difficulties in scaling its business.

Trump Media stock rose over 7% on Friday after announcing the rollout of a TV streaming service on Truth Social. Previously, shares had fallen over 33% despite a brief surge following an assassination attempt on Former President Donald Trump. Trump, the Republican presidential nominee, owns nearly 59% of the company, and it’s widely viewed as an election polling machine.

So, with more volatility on the horizon with the election coming in around three months, the question is whether DJT stock is worth trading right now.

New Linear TV Streaming Service

Aiming to counter Big Tech’s censorship by promoting free speech online, Trump Media & Technology has been gaining traction through Truth Social. Its shares saw a slight surge August 7 pre-market. DJT stock has increased over 75% in the past year. The company launched linear TV streaming on iOS devices, requiring an updated Truth Social app from the Apple App Store. This feature uses TMTG’s custom-built content delivery network.

TMTG launched streaming on iOS as part of its Truth+ rollout, with plans to add features like a 14-day guide, network DVR and video on demand. Upcoming apps will support in-home TV viewing and new advertising options. The company will expand streaming offerings and continue testing technology, while working towards a perpetual CDN licensing deal.

Trump Media plans to release streaming apps for home TVs and enhance advertising features, focusing on news, Christian and family-friendly content. They aim to control their tech delivery stack via a private network CDN to avoid “cancellation” by Big Tech. Yesterday, Trump Media launched linear TV streaming on Android devices, furthering their goal of creating an “uncancellable” platform. DJT shares rose 0.66% to $27.29 in premarket trading Wednesday.

Q2 Earnings Report Nowhere

Despite abundant Donald Trump news, Trump Media remains silent, especially regarding its crucial second-quarter earnings report. With a large number of “locked-up” shares becoming sellable on September 25, management should articulate the company’s value and future vision. Following a weak first-quarter report, timely release of the second-quarter report is vital, yet no date has been set. Failure to schedule an earnings call soon risks a repeat of the first quarter’s silent report drop, allowing media to focus on negative aspects.

Trump Media stock is vastly overvalued, trading at over 7,000 times sales with cash holdings of just $1.44 per share. Shareholders’ inability to sell has skewed perceptions of its strength. When locked-up shares become sellable, a wave of selling could sharply reduce the price. Management must offer a compelling reason to hold or buy. Selling could start early if the stock closes at $12 or higher for 20 trading days starting August 22, potentially unlocking shares by September 20. Otherwise, the lock-up ends on September 25.

Companies know that flashy annual reports alone aren’t enough; management’s insights and forecasts are crucial. Trump Media’s fanbase is loyal, but shareholders, paid in stock, face a coming opportunity to sell. They’ll decide whether to sell or hold based on their belief in the company’s future growth.

DJT Stock Looks Like a Sell

Since former President Trump’s conviction on May 30, Trump Media has lost about half its market value. The stock dropped another 5% on June 21, losing nearly $3 billion from Trump’s net worth. Recent approval of a regulatory move threatens to dilute shareholder holdings, heightening concerns about further losses.

DJT clearly finds itself among the group of meme stocks that’s likely to remain highly volatile before and after the election. Its platform, Truth Social, pales compared to rivals like Instagram, Facebook, and X. While Meta (NASDAQ:META) and X boast billions and hundreds of millions of users respectively, Truth Social’s user count is undisclosed and falling, with a 39% drop in traffic from April 2023 to May 2024.

The platform mainly attracts Trump supporters, and its traffic spiked briefly after Trump’s July assassination attempt. But over the long-term, I don’t see any real utility in this platform or in owning its stock. The thing is, trading DJT stock right now may be a risky bet on either side. Thus, if you’re not selling, I think steering clear of this name for good is the right move.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.