Investors in Trump Media & Technology Group’s stock have seen a sharp decline in recent days, with shares tumbling 11% on Tuesday following an 18% drop on Monday. The company’s premier product, Truth Social, announced a major expansion into streaming, which is a costly venture that many media companies have struggled to profit from. The stock, majority-owned by former President Donald Trump, is down 70% from its all-time high and is in need of cash as it continues to struggle to make a profit. Experts have cautioned investors to be cautious trading the stock due to its lack of fundamentals supporting its high valuation.
Trump Media lost $58 million in 2023 and made only $4.1 million in revenue. To raise cash, the company announced it would sell 21.5 million more shares to the public, which would dilute the value for existing shareholders. The streaming initiative by Truth Social did not excite investors, with the company hoping to launch a content delivery network for live TV streaming, including news, religious programming, and family-friendly shows and movies. The company aims to provide a platform for content that has been cancelled or suppressed on other platforms.
The CEO of TMTG, Devin Nunes, a former Republican congressman, stated that their streaming content aims to provide a permanent home for high-quality news and entertainment that faces discrimination on other platforms. This push into streaming is reminiscent of Elon Musk’s X platform, which has struggled to attract advertisers despite having hundreds of millions of active users. The valuation of TMTG appears to be more driven by Trump’s association with the brand rather than the company’s fundamentals, turning shares into a meme stock that trades on emotional responses rather than financial performance.
Following the merger with a blank-check company in late March, Trump added billions to his net worth, but the value of his shares has since plummeted, causing a significant decrease in his net worth. The stock’s decline has hit Trump’s net worth by approximately $200 million on Tuesday alone. With Truth Social’s expansion into streaming and the company’s ongoing struggle to turn a profit, investors are becoming increasingly wary of Trump Media & Technology Group’s stock.
In summary, Trump Media & Technology Group’s stock has experienced a significant decline, with shares dropping sharply and the company struggling to make a profit. The push into streaming by Truth Social has not excited investors, and the company’s valuation appears to be largely driven by Trump’s association rather than fundamentals. This has turned the stock into a meme stock that trades on emotional responses. Despite Trump’s initial gains from the merger, his net worth has taken a hit due to the stock’s decline, leading investors to be cautious when considering trading TMTG’s shares.
