Trump Media Stock’s Wild Ride: Should You Jump on Board or Steer Clear?

Stocks to sell

Trump Media & Technology Group (NASDAQ:DJT) stock, the Donald Trump media project that recently went public to much fanfare, has the tumultuous nature of meme stock. Shares soared on their first availability, then plunged, but are starting to rise once more.

None of it has to do with Trump Media’s financials. The company reported over $4 million in sales last year but also a $60 million loss. That kind of disparity would have sunk a different company. Trump’s personality has contributed to DJT stock’s 81% increase in 2024.

A Closer Look at DJT Stock

For more sober investors who aren’t actively rooting for or against the former president and trading on their emotions, we need to decide whether this social media company is a good investment on its merits.

Creating a social media company with critical mass is no easy feat, and doing it profitably is even more so.

X (formerly Twitter) still struggles to make money after 18 years. Elon Musk has made the platform monetized through ads and user fees. Trump Media might have a more difficult time.

Truth Social, DJT’s social media platform, recorded 1.5 million unique users in March, according to data from SimilarWeb.

That was a 130% surge from February and probably had more to do with people wanting to check out the Trump site as the company began trading publicly. In contrast, X had 115 million monthly users.

Still, Truth Social had far more users than either Parler or Gab. Those sites, however, were the victim of Big Tech conspiring to limit access to their sites.

Parler, for example, saw its platform pulled from Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google, Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN).

It had once been the fast-growing app and was cut off at the knees through tech’s concerted efforts.

They’re not likely to take on the former president again, however.

Although Trump was banned from social media after losing the last election, Musk restored his privileges after buying the platform and others followed suit.

Joined at the Hip

DJT stock is going to be volatile, at least throughout the presidential election. If Trump wins the White House again in November, it could extend further. A loss might cut short any nascent growth it might possess.

While investors need to separate the social media platform from the president, the business itself can’t. It highlights the risk of being so closely tied to a larger-than-life personality.

While Steve Jobs at Apple wasn’t quite the same, at least initially the company’s fortunes rose and fell with his presence or absence.

Trump Media & Technology needs time to mature into a vehicle separate from Trump. The social media platform has big plans. Streaming video and becoming a home for alternative media and content creators. It could be big.

Yet a large driving force behind Truth Social was creating a safe space for alternative views that were banned by other social media sites. Now, with Musk a fairly strong free speech advocate, the impetus behind the startup site is now diminished.

Now Is Not the Time

The mainstream media is in decline and in large part has written off large swaths of a potential audience.

In choosing to cater to an ideological base, media has limited its potential. And yet that is what Trump Media is doing too, perhaps of necessity, but definitely a limiting factor.

Amid the wild swings in DJT stock, it’s hard to argue in favor of an investment here. There is just too much volatility unrelated to the actual business of Trump Media & Technology. And that means most investors should just stay on the sidelines.

On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.

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