Shares of social media company Truth Social (DJT) soared on Monday after Elon Musk unexpectedly appeared at Donald Trump’s rally in Butler, Pennsylvania. This rally was significant as it took place at the same location where Trump survived an assassination attempt in July. Musk, who is the CEO of Tesla and SpaceX, announced his support for Trump at the event and stated that Trump is the only candidate capable of preserving democracy in the upcoming election.
Despite this surge, Trump Media’s stock has seen a lot of volatility since going public through a merger with Digital World Acquisition Corp. This has caused the value of Trump’s 60% stake in the company to change wildly since then, which currently stands at $2.3 billion.
Contributing to the price swings have been various political and business developments, such as Trump’s legal issues and President Joe Biden’s exit from the 2024 race. The expiration of the lockup period in September also affected shares, but Trump confirmed he has no plans to sell his shares.
Long-Term Viability Concerns
When analyzing the company at the fundamental level, it is hard not to have concerns about the company’s long-term viability. Truth Social faces significant challenges like increased competition from major social media platforms such as Facebook and X (formerly Twitter).
In addition, Truth Social has been struggling financially and reported a $16.4 million net loss for the second quarter, which was largely due to expenses from its SPAC deal. However, revenues have fallen 30% year-over-year, which suggests that it is having a hard time gaining market share.
Is DJT Stock a Buy?
Using TipRanks’ technical analysis tool, the indicators seem to point to a neutral outlook for DJT stock. Indeed, the summary section pictured below shows that eight indicators are Bullish, compared to five Neutral and nine Bearish indicators.
