Trump Media Stock: The Controversial Social Media Play Is More Than Just a Meme

Stock Market

Trump Media & Technology Group (NASDAQ:DJT), typically shortened to Trump Media, is a target of controversy and constant debate. Trump Media stock is sometimes labeled as a meme stock because of the attention former President Donald Trump receives. Sensible investors can find reasons to hold this stock.

Trump Media, first and foremost, will sink or swim as the holding company of the Truth Social media platform. Thus, Trump Media’s investors should be able to envision the future growth of Truth Social.

Sure, you can and should consider the meme-stock angle with Trump Media stock. Just don’t get too distracted because you’ll miss the real story here and, potentially, a buying opportunity.

Be Patient With Trump Media Stock

For one thing, I don’t recommend investing in Trump Media as a get-rich-quick scheme. Patience will be the key that unlocks success with Trump Media stock.

Sometimes, there will be setbacks and delays. For example, earlier this month, the U.S. Securities and Exchange Commission charged former Trump Media auditor BF Borgers CPA with “massive fraud.”

Trump Media promptly addressed this problem by appointing a new auditor, Semple, Marchal & Cooper, LLP. This doesn’t mean that the issue is entirely cleared up, though.

An SEC filing revealed that Trump Media won’t be able to submit its first-quarter financial information on time. This development shouldn’t come as a huge surprise, but it might disappoint some investors.

We’ll all just have to wait patiently for Trump Media’s next quarterly financial filing. In the meantime, just think about whether you have a firm belief in Truth Social as an alternative-media outlet.

Also, remember Truth Social’s revenue grew at a rapid rate, from $1.47 million in 2022 to $4.13 million in 2023.

Trump Media Isn’t GameStop or AMC Entertainment

I recently came across a Barron’s article stating that Trump Media failed the meme stock test. That declaration took me by surprise, but it actually makes sense and could even be considered a compliment to Trump Media.

By now, you may have heard about the huge mid-May short squeeze in GameStop (NYSE:GME) stock and AMC Entertainment (NYSE:AMC) stock. This occurred after a popular Reddit user and meme-stock trader reemerged on social media after a long hiatus.

GameStock stock and AMC Entertainment stock rallied sharply, but Trump Media stock made a much smaller move. This shouldn’t be considered a letdown, though.

If anything, it’s just a sign that Trump Media’s shareholders might not have to deal with extreme volatility anymore. Finally, the process of price discovery might be almost over, and Trump Media’s investors can enjoy some stability.

Or at least, one can hope that Trump Media stock won’t behave in a meme-like fashion until the November election. Then, Trump Media’s shareholders will probably need to brace for a wild, volatile month or two.

Trump Media Stock: Understand Why You Own It

The best reason to own Trump Media stock is because you expect Truth Social to grow its revenue and eventually turn a profit. It’s really that simple, but meme-stock comparisons to GameStop and AMC Entertainment can easily distract investors.

At the same time, it’s important to be patient with Trump Media and prepare for election-time volatility. If you’re on board with all of that, feel free to buy and hold a few shares of Trump Media stock.

On the date of publication, David Moadel did not have (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.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

Articles You May Like

Tech Stocks Will Party Like It’s 1998 All Over Again
3 Stocks to Buy ASAP If You Are Betting on a September Rate Cut
3 EV Stocks to Sell in June Before They Dive
The Dividend Duchesses: 3 Stocks That Will Grace Your Portfolio with Royal Returns
3 Stocks to Buy for Exposure to the Anthropic Boom