The 2024 presidential race was upended by the horrific assassination attempt on Donald Trump at a political rally in Pennsylvania this past Saturday evening.
The photo of the bloody former president will be one of the defining images of this election cycle. Though its eventual impact on the presidential race remains to be seen, the odds of his winning rose fairly dramatically in the immediate aftermath.
Shares of Trump Media & Technology Group (NASDAQ:DJT), which owns Trump’s social media platform, Truth Social, surged following the attack. Overall, the stock is up by 108% in 2024 alone.
Should the improved odds of a presidential victory encourage would-be buyers to purchase the stock? Definitely not, says 5-star investor Danil Sereda.
“DJT is deeply unprofitable, with no real moat, making huge losses that are unlikely to turn into profits even if Trump becomes president,” Sereda opined.
If one is to judge by any actual measure of company performance, DJT is simply not a good investment, according to Sereda.
“Despite an increase in sales, the company’s absolute metrics and lack of growth prospects didn’t support the stock’s high-flying price,” argues the investor.
What should make this more concerning for Truth Social proponents is that many of its social media competitors have been growing, says Sereda.
“If we evaluate DJT’s financial dynamics and compare them with those of its listed peers, it’s clear that things are not going well for Trump Media,” writes the investor, who continues that “not only its EBIT was a negative $98.4 million, but the net loss for Q1 FY2024 alone amounted to -$320.7 million.”
The investor also points out that operating expenses for DJT increased by a factor of 18.5 quarter-over-quarter.
Sereda expects that the company’s poor performance will prompt DJT to dilute its shares to raise capital, weakening the position of existing shareholders and those who purchase shares now.
Another wrinkle to consider is the prospect of short sellers, writes Sereda. Especially in light of the raised share prices, there could be a fairly significant bear market for DJT. This would add additional downward pressure on the stock.
Sereda is therefore urging investors to stay away from DJT, reiterating a Sell rating on the stock. (To watch Sereda’s track record, click here)
Trump Media appears to be flying under the Street’s radar, with no analysts currently covering it. (See DJI 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.
