Truth Social (DJT) seems to resemble its founder’s wrestling career in the WWE; it is great entertainment, but you don’t know whether to take it seriously or not. It’s also very unpredictable, making it difficult to anticipate the future. Since its introduction on the Nasdaq in March 2024, DJT stock has been up and down, directly correlating to Donald Trump’s ongoing affairs, whether tied to his presidential campaign or legal indictments. For example, a day after the failed assassination in mid-July, DJT stock surged by 30%, riding on the firm belief that the seat at the Oval Office is pretty much guaranteed for Trump. Since then, however, the stock has decreased by over 55% as the results of the coming elections become difficult to foresee.
Our writer at TipRanks, Bernard Zambonin, has analyzed DJT stock more extensively, and you can read it here. For now, here are 3 reasons he believes DJT stock is an unfounded bet:
- DJT doesn’t look like a $2.4 billion market cap company: There are a few glaring issues with Truth Social; one of them is its market cap of $2.4 billion. The company reported an annual loss of $60 million and an income of $5 million; these figures don’t warrant a $2 billion market cap. The social media platform, which, according to its manifest, endorses free speech, has 119,000 subscribers and doesn’t seem to have the leverage to grow further, even with its plans of forming a TMTG+ streaming service. Right now, the stock relies only on the operations of Truth Social, so the $2.4 billion market looks very much over-valuated.
- The DJT brand: Another crucial factor hampering the DJT stock is the correlation between the ongoing reality show, which is the life of Donald Trump, and Truth Social; it doesn’t have anything to do with the company itself, which is a worry. The social media company hasn’t established itself as a separate entity, so whatever happens to Trump directly impacts the DJT stock, regardless of its achievements or lack thereof.
- Acts more like a Meme stock: DJT’s value and trading are very similar to those of a meme stock. The share price is mainly affected by movements caused by momentum traders using vague indicators. It seems like the stock ups and downs can be affected just by investors’ whims and nothing concrete or substantial information from the company. DJT stock looks more suitable to short-term investors looking to buy in the dip and sell when it reaches higher ground, however, there are no real indicators that show any rational behavior of the stock to really plan this kind of action.
Takeaway
Everything about DJT tells us it’s an unreliable stock. No one knows how it’s going to act tomorrow. It doesn’t seem to warrant its $2.4 billion market cap and relies solely on its founder’s exploits outside the network. If there’s a stock that resembles the casino experience, it’s the DJT stock.
