Trump Media & Technology Group (NASDAQ:DJT) faces the same uphill climb as most new ventures attempting to compete with established incumbents in any field, as they work to carve out a unique niche and market share. This remains true even when a former president is the face of the company.
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In its attempt to break into the streaming space, the company is up against industry titans like Netflix and Disney. DJT introduced its on-demand streaming service, Truth+, in August, offering a mix of news, commentary, weather, lifestyle, and entertainment. The platform also plans to expand its offerings to include family-focused and Christian programming.
However, not everyone is optimistic about its prospects. An investor, who goes by the pseudonym Hunter Wolf Research, expressed skepticism, stating, “As a startup with limited capital, Trump Media is unlikely to succeed in the competitive streaming market.
Hunter Wolf describes the massive sums required to both source content from external creators and develop it internally. For example, Netflix will spend more than $6.7 billion for a 10-year partnership with World Wrestling Entertainment, while Disney spent $27 billion on content in FY23 and has allocated another $25 billion for FY24.
In comparison, Hunter Wolf points out, DJT has only $344 million in cash, making it dubious that the company will be able to husband the resources to broadcast the content required to drive advertisements and subscription fees.
“It is unlikely for the company to attract a large number of subscribers for its streaming business in the future,” Hunter Wolf opined.
There are a number of other red flags that the investor highlights, such as C-level instability, a legal spat with one of its major shareholders, and the dumping of millions of shares by another large shareholder.
The recent departures of the Chief Operating Officer and Chief Product Officer have also raised doubts about CEO Devin Nunes’ leadership, according to Wolf.
In addition, a judge recently ruled that Arc Global Investments II has the rights to an additional 1.05 million shares than DJT had acknowledged.
“As a result, Trump Media might need to issue more shares, which would dilute the equity ownership of existing shareholders,” cautions Hunter Wolf.
Lastly, the investor cites the recent news that United Atlantic Ventures has sold off almost 11 million shares following the expiration of the six-month lockdown period last month.
For Hunter Wolf, all these worries coalesce into a strong argument against the stock, which the investor has rated a Sell. Hunter Wolf’s 12-month price target of $10 would represent losses of 66%. (To watch Hunter Wolf Research’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.
