Trump Media (NASDAQ:DJT) shares have been extremely volatile this week following Donald J. Trump’s sweeping victory on November 5th, which marked one of the most significant political comebacks in recent history.
One of the biggest bull arguments in favor of Truth Social – the Trump-founded social media platform –was that an election win for the Republican candidate would boost share prices. Its performance throughout the month of October would seem to support this theory, as prices skyrocketed as the odds of his victory increased.
However, top investor Stone Fox Capital remains skeptical that this political triumph will lead to sustainable growth for the company.
“The company lacks a clear business plan and unique offerings, with Truth Social and Truth+ failing to differentiate from existing platforms,” remarks the 5-star investor.
Stone Fox further points out that there’s no indication DJT is laying the necessary groundwork to compete with giants like YouTube or Rumble.
“The company doesn’t appear to have signed up any major or exclusive content providers, with the majority of the steaming shows related to conservative news readily available in other far more popular media outlets,” the investor argues.
Furthermore, Stone Fox notes that one of the main selling points for DJT was that those more mainstream platforms were not reliable hosts for controversial personalities and their content. Trump’s victory obviates this need, as no medium would be able to censor a president.
“Trump is now working with Elon Musk, and X appears to be setting record usage levels, thereby making the hurdle for Truth Social even higher,” notes the investor, adding that Trump has already been back and posting on X.
All this is occurring against backdrop of poor financials from Q3 2024, which Trump Media “surprisingly” released on election night, writes Stone Fox. Despite its $7 billion plus valuation, DJT only generated $1 million in net sales to go along with $23.7 million in operating losses.
“With no visible business plan to generate profits, the stock shouldn’t trade much more than cash value of $3 per share,” concludes Stone Fox, who rates DJT shares 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.
