Trump Media & Technology Group (NASDAQ:DJT) has been on a rollercoaster ride in the stock market, mirroring the tumultuous nature of its owner, former President Donald Trump. Initially entering the market through a Special Purpose Acquisition Company (SPAC) under the DWAC ticker, the company underwent a significant transformation following its merger with Truth Social, now trading under the symbol DJT. Throughout this transformative journey, its share price has swung dramatically, ranging from a low of $12.40 to a high of $79.38, reflecting the market’s uncertainty and volatility surrounding its future prospects.
Despite its initial excitement and the buzz surrounding its entry into the social media landscape, DJT’s fortunes quickly soured, with its stock plunging by a staggering 59% within a month of reaching its peak. This sharp decline has made it a prime target for short sellers on Wall Street, highlighting the skepticism and caution prevailing among investors.
Daniel Jones, a prominent investor, has been vocal about his bearish stance on DJT. While some investors might be enticed by the stock’s volatility, Jones warns against the temptation to view the downturn as an opportune moment to buy. Instead, he believes that the stock’s true bottom may be even lower than what many anticipate, cautioning investors against underestimating the extent of its overvaluation.
Jones rates DJT stock as a Strong Sell, citing fundamental concerns about its valuation and growth prospects. Despite reporting a significant increase in revenue from $1.47 million in 2022 to $4.13 million in 2023, DJT has been notably opaque about crucial operational metrics, such as daily or monthly active users. This lack of transparency raises red flags about the company’s ability to sustainably grow its user base and generate long-term value.
At the heart of the issue lies the glaring disparity between DJT’s revenue and its inflated valuation, which currently stands at an eye-watering $4.45 billion. Even under the most optimistic scenarios, Jones argues that the stock’s valuation remains unjustified, particularly given the lackluster expansion of its user base. Third-party data suggests minimal growth in downloads of the Truth Social app, casting doubt on the company’s ability to justify its lofty valuation.
Furthermore, Jones underscores the stark contrast in value per active user between DJT and industry giants like Meta (formerly Facebook). While Meta reports a value per monthly active user (MAU) of $299.25, DJT’s valuation per active user stands at approximately $4,115. This glaring disconnect underscores the inflated nature of DJT’s valuation and suggests that a significant downward adjustment in its share price may be warranted.
In conclusion, Jones paints a sobering picture of DJT’s prospects, urging investors to exercise caution and conduct thorough due diligence before considering investments in speculative stocks like DJT. While the allure of volatility may be enticing to some, Jones emphasizes the importance of focusing on the fundamentals and avoiding the temptation to chase short-term gains in a market characterized by uncertainty and speculation.