Like its owner, shares of Trump Media & Technology Group (NASDAQ:DJT) have been extremely volatile over the past year. First trading under the guise of a SPAC under the DWAC ticker and then following the merger with Truth Social, under its current moniker of DJT, its share price has ranged between $12.40 and a high of $79.38. However, within less than a month, the stock plummeted by a staggering 59% from its peak, making it one of the most shorted stocks on Wall Street.
And it’s no wonder, says top investor Daniel Jones. If you’re attracted to volatility, the stock might seem appealing, but fundamentally, it remains overvalued. So, if you’re thinking the sharp drop might present an appealing opportunity, think again.
“The bad news that I have for investors is that, while this might seem like a good time to get in at what might be the bottom, that bottom is likely to be significantly lower than most would think,” the 5-star investor said. “Based on my own assessments, even a generous view of the company suggests a fair value that is lower than $5 per share. And in all likelihood, the stock is worth even less than that in my opinion.”
Accordingly, Jones rates DJT stock a Strong Sell. (To watch Jones’ track record, click here)
While treading carefully through a potential minefield to ensure his analysis remains apolitical, Jones offers a grim prognosis: “The picture looks bad… really bad.” However, Jones gives the bulls some slack, pointing to a significant increase in revenue from $1.47 million in 2022 to $4.13 million in 2023. But that’s sort of all the info you get as the company hasn’t provided data regarding daily or monthly active users. “As opposed to many of the other social platforms and other technology businesses out there, they have chosen to operate in a rather opaque manner,” Jones goes on to say.
The basic problem is that the revenue haul is entirely disconnected from its valuation, which even following the sharp pullback stands at an unrealistic $4.45 billion. And if you want to be extremely generous and say the company could grow into its valuation, that doesn’t hold water either when considering the lackluster growth of the user base. Given the company doesn’t offer any data, third-party sources will have to do. According to Statista, the combined downloads of the Truth Social app in the App Store and Google Play reached 97,174 in February, amounting to only a 3.6% year-over-year uptick. But growth is not even consistent as in January, app downloads fell by 12% compared to last year.
Lastly, its current market cap suggests a value per active user of roughly ~$4,115. Considering that Meta, a vastly more successful company, reports the value of a MAU to be $299.25, assuming DJT were to be worth the same value on a per monthly active user basis as Meta, Jones calculates that it would get an enterprise value of around $389 million. “That would imply a value for the company of about $4.54 per share,” he notes. And that’s being generous. Compare it to other social media platforms and their value per MAU and it’s “not hard to imagine shares being worth well below $1.” (See DJT stock analysis)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
