Donald J. Trump–the once and future president–is certainly riding high. On the heels of his electoral victory last month, the president-elect has been busy assembling his new cabinet and the rest of the leadership cadre who will be in charge come January 20th.
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Trump Media & Technology Group (NASDAQ:DJT)–the parent company of Truth Social–is also closing the year standing tall. Shares of the social media company are up around 4% in the month and half since the election, and all told the stock has gained over 100% year-to-date.
Now, as the company founder prepares to assume the highest office in the land, there is considerable excitement that Truth Social could be on the up-and-up as well. According to conventional wisdom, everyone from politicos to Average Joe’s will tune into the social media platform to follow Trump’s coming-and-goings.
Not so fast, cautions the top investor known by the pseudonym Noah’s Arc Capital Management, who is not convinced Trump’s political victory will translate into consistent users (or revenues).
“While Trump Media & Technology Group — which really focuses on Truth Social — is now majority owned by someone who is set to be the next president, this doesn’t mean the platform is set up for success,” writes the 5-star investor, who sits in the top 4% of TipRanks’ stock pros.
The investor further explains that Truth Social’s bounce rate–in other words, users who leave the platform after a single page view–is over 54.57%. (As reference, X’s bounce rate is 35.09%, meaning that the Elon Musk-owned platform does a better job of retaining users.)
This metric certainly suggests, Noah’s Arc continues, that heightened interest in Trump does not automatically support greater conversion rates.
“It means people are likely reading Trump’s quotes or posts on Truth Social and then choosing to come over to the platform to briefly view the post, but they’re not sticking around to create an account,” notes the investor.
The company’s numbers from the past few months also do not back up the argument that Trump’s improving political prospects lead to better financial performance. Noah’s Arc points out that revenues have been declining or stagnant over the past two years, and even decreased by $60 million year-over-year in the three months ending on September 30, 2024 (i.e. the time when Trump’s pollling numbers were improving).
The investor concludes that Trump’s recent “hot hand … doesn’t necessarily make his company a good opportunity.” Noah’s Arc is therefore maintaining a Strong Sell rating. (To watch Noah’s Arc’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.
