The fortunes of Trump Media and Technology Group (NASDAQ:DJT) seem to rise and fall in tandem with Donald Trump’s political journey. As key events approach, such as the presidential and vice-presidential debates scheduled for September 9th and October 1st, some market movement is expected.
Of course, the real turning point will be on November 5th, when the outcome of Trump’s attempt to reclaim the White House becomes clear.
But there’s another date that investors in Trump Media should keep an eye on – September 25th. This date marks the expiration of the lock-up provision on Trump Media shares, granting Trump and other insiders the ability to sell their stakes. While it’s uncertain whether they will take this step, even the potential for such moves could shake up the struggling stock, which has already plunged over 70% from its late-March peak.
For one investor, known by the pseudonym Stone Fox Capital, this is one of the many reasons you should avoid DJT.
“The key investor takeaway is that investors need to brace for major downside risk in Trump Media with the upcoming lock-up expiration in the next few weeks,” writes SFC.
While it is not rare for lock-up expirations to drag the stock price down a bit, DJT faces several compounding issues. SFC points out the company’s dismal Q2 2024 report, which showed revenues below $1 million. Additionally, Truth Social, Trump’s social media platform, continues to lag far behind its competitors in terms of traffic, including X – where Trump has recently resumed posting.
Moreover, the investor cannot detect a coherent game plan to improve the situation going forward.
“The company hasn’t provided any data on how the business is going to grow users, engagement and hence ad revenues,” SFC.
SFC further questions the sustainability of the company’s $3.5 billion valuation, citing its “minimal revenue and lack of growth.” To put this in perspective, competitors like Rumble and Reddit are valued at 13x and 7x their projected sales, respectively. In comparison, Trump Media’s estimated revenue for 2025 is unlikely to exceed $10 to $20 million, making its valuation seem inflated.
All this is to say, the poor fundamentals are not helped by the prospect that shares could soon be flooding the market, dragging prices down even further. SCF remains “ultra-Bearish” on DJT, rating the stock a Strong Sell. (To watch Stone Fox Capital’s track record, click here)
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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.
