Trump Media Stock Is NOT a Buy Despite the Potential for a Short-Term Surge

Stocks to sell

The unprecedented conviction of former President Donald Trump on charges many across the political spectrum agree was a stretch of the law could ignite new interest in Trump Media & Technology Group (NASDAQ:DJT), but expect volatility from Trump Media stock. Trump may use Truth Social to amplify his views and appeal to the case.

If Trump becomes even more active on Truth Social, it could draw in many more users wanting to follow him and hear what he has to say.

Not that his every pronouncement isn’t already amplified far and wide away from the social media site but it could make the platform much more relevant as the campaign season progresses.

While DJT stock is flat from where it began trading in late-March when Trump Media began trading, and it fell 5% last Friday after the conviction, the stock is up 115% from its April low.

Trump Media & Technology is and will be a volatile stock. It will rise and fall based on the force of the President’s personality. It’s why you should avoid putting your money into DJT stock.

An Unprecedented Situation

Trump was found guilty on all 34 charges of falsifying business records leveled against him. The odds of the conviction being overturned on appeal are high, according to pundits, although he may have to go all the way to the U.S. Supreme Court.

Analysts on both sides of the aisle say packaging individual misdemeanor charges into a felony as the district attorney did is a novel but dubious tactic.

Yet whether you support Trump or oppose him, as investors we need to put those emotions aside. We need to look at whether Trump Media & Technology is a good business for putting our money to work.

The early indications say no. Trump Media, and more specifically Truth Social, is a shell of a social media platform compared to X, Meta Platform‘s (NASDAQ:META) Facebook and Instagram or Snap‘s (NYSE:SNAP) Snapchat. 

Trump Media doesn’t give investors those numbers. It says because Truth Social is so new (it’s about two-and-a-half years old) focusing on traditional metrics such as monthly daily active users will distract management and the markets from what is being built.

That is a convenient excuse if your platform isn’t attracting very many users. It forces analysts to use alternative, arguably less viable sources, to make a determination about whether the site is growing or not.

A Shrinking Pool Amid a Growing Market

Recently CNBC reported Similarweb found daily visits to Truth Social fell 21% in May from April. They were down 35% from March when it had 1.5 million users.

Meta Platforms, on the other hand, reported daily active people jumped 7% in the first quarter to 3.24 billion users across its family of apps. Snap saw a 10% surge in DAU in its first quarter. There is a reason social media sites use and report these metrics. 

X, which is more akin to Truth Social, also enjoyed a big increase in monthly active users, according to CEO Elon Musk. In a tweet on the platform late last month, he said the social media site had 600 million monthly active users.

Two months prior he claimed it had over 500 million MAU. That’s a 20% increase in just 60 days.

Because X is a private company, though, there is nothing official about these figures. It is just its CEO declaring this to be true. Other sites say users have declined.

The Bottom Line on Trump Media Stock

Regardless of the actual number of users Truth Social has, Trump Media & Technology stock will ricochet higher and lower. It is very much a meme stock in that shares won’t trade based on the business fundamentals.

It will be by dint of President Donald Trump’s public pronouncements and those made about him. 

In the short term, that suggests DJT stock could soar. As he campaigns for office and the appeal of his conviction wends its way through the courts, Trump will become more vocal. That could build momentum in his social media site’s ability to attract users.

Still, that is no way to invest and you should stay away from Trump Media & Technology, whether you plan to vote for him in November or not.

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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