By Trump Media & Technology Group Corp (NASDAQ: DJT) gained some 15% on Tuesday amidst expectations that Donald Trump will be reelected as the President of the United States.
Investors seem confident that a second Trump presidency would be a boon for the Florida-based company that owns and operates Truth Social.
Why? Because Trump could announce policies that favor DJT or more people could sign up for Truth Social with him in the Office.
The Republican presidential candidate currently owns about 57% of DJT. Trump Media stock has more than tripled since September 23rd but is still down about 40% versus its year-to-date high in late March.
Trump Media stock will lose over the long term
DJT shares have lost about $12 in value in recent days as the odds of Kamala Harris winning the US elections in 2024 improved relative to Donald Trump.
The most recent polls suggest the two candidates are neck and neck, with each receiving support from about 49% of the voters.
And while Trump Media stock may rally if the Republican candidate lands in the White House this month – but its ability to sustain those gains over the long term hangs in the balance, as per Jay Woods.
“We’re trading this like GameStop on steroids right now. Kudos to those who are trading it and making money. But over the long term, the metrics don’t make any sense,” the chief global strategist of Freedom Capital Markets told CNBC in an interview today.
Unusual volatility and confusing metrics may partially be the reason why Wall Street analysts do not cover Trump Media & Technology Group. Plus, it doesn’t pay a dividend either to attract income investors.
Nonetheless, DJT stock has been trending on WallStreetBets heading into election day, which may suggest the retail traders are warming up to a possible short squeeze.
DJT is losing users and ads dollars
Jay Woods sees Trump Media stock as a “sell” even if Donald Trump wins the US elections 2024 also because the monthly active users as well as the advertising dollars have declined recently.
Another red flag is that the two co-founders sold their 5% stake in DJT stock “the second the window opened”. Note that Donald Trump still tweets as he has 90 million followers on Twitter and only 7 million on Truth Social. That doesn’t bode all too well for Trump Media stock either.
In August, Trump Media & Technology Group Corp reported over $16 million in net loss for its second financial quarter. The Nasdaq-listed firm also saw its revenue tank by 30% to about $0.836 million in Q2.
Still, DJT currently has a market cap of close to $8.0 billion, which is exceptionally high considering its rather modest revenue.
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