No professional investor will invest in Trump Media & Technology Group (TMTG, stock symbol DJT) based on the assumption that the underlying business is a financially sound proposition. They may try to short it. Or gamble that enough suckers are buying to temporarily drive up the price for a quick buy and dump. Although at this point, who would those suckers be?
The flashing red light is not TMTG's multi-million dollar loss — $58M last year. The fundamental weakness is its top line. In 2023, after two years, TMTG generated $4.13 million in revenue. This amounts to about half the sales of an average Chick-fil-A franchise.
A deluded optimist might compare TMTG to Amazon. And point out that in its first year in business (1995), the online behemoth generated a mere $511,000 in revenue. However, in its second year, Amazon sales were $15.75M. And in its third year (where TMTG is now), Amazon increased sales to $147.79M. The rest is history.
This comparison raises the question: where will TMTG sales growth come from? Its only business is Truth Social. Will there even be sales growth? In 2023 alone, TMTG saw its business decline in Q4. And Truth Social is hemorrhaging users. However, that is only a best guess, as TMTG's uninformative management will not say how many people use the site. Note: If the numbers were positive, you could be damn sure Trump would be crowing about them.
I am also curious to know what “technology” TMTG is selling.
The bottom line is that DJT is a stock only MAGAs can love. So let them tell us why they love it so much they have ignored the fundamentals and bought it.
The Washington Post reported on one such blinkered investor.
Jerry Dean McLain first bet on former president Donald Trump’s Truth Social two years ago, buying into the Trump company’s planned merger partner, Digital World Acquisition, at $90 a share. Over time, as the price changed, he kept buying, amassing hundreds of shares for $25,000 — pretty much his “whole nest egg,” he said.
As everyone knows, and WaPo further reports, the results were not optimal.
That nest egg has lost about half its value in the past two weeks as Trump Media & Technology Group’s share price dropped from $66 after its public debut last month to $32 on Friday.
[It is trading at $26.50 as I write this.]
Regardless, McClain, 71, proved to be the perfect mark for a conman. This poor fool, who owns a tree removal service outside Oklahoma City, said he’s not worried. If anything, he wants to buy more.
“I know good and well it’s in Trump’s hands, and he’s got plans,” he said. “I have no doubt it’s going to explode sometime.”
I have no doubt Trump has “plans.” But McLain’s belief that those plans include McClain’s future prosperity is pure self-delusion. (See people buying into the Prosperity Gospel bullshit.)
(Note all the Truth Social (TS) comments in this diary are sourced from WaPo. The commentary is mine. I do not have a TS account — I do not want to give Trump the traffic. And I have removed all links to TS. The reader can find them HERE if they have a TS account)
Todd Schlanger, an interior designer at a furniture store in West Palm Beach invested $20,000 and is buying new shares weekly. In a Truth Social post last week, he encouraged “everyone who supports Donald Trump and Truth [Social to] buy a share every day.” Although he seemed at least dimly aware that things may get worse, asking: “Do you think we have hit bottom?”
Schlanger, being a MAGA, is sure that the financial free fall is the work of nefarious political entities. He warns of “stock manipulation” and an “organized effort” to besmirch the company. He added, “It’s got to be political,” from all the “liberals that are trying to knock it down.” He does not explain the mechanism of this destruction.
Truth Social user @BaldylocksUSMC said, “The fight has been long and hard on most of us” and that “this stock is not for the weak.” They added, in a masterpiece of projection, that one day Truth Social investors would triumph over critics who were “brainwashed beyond repair.”
Some sober-minded experts have pointed out the obvious. Take Barry Diller, who has made a fortune in media. He called Trump Media a “scam” stock bought by “dopes.” However, as always, there are the Dunning Kruger morons who know better.
User @Handbag72 argued Diller didn’t “get it” and was “at risk of [losing] $$$$.” The next day, the account shared a 2021 blog post from the investing forum Seeking Alpha, saying Truth Social could be worth $1 trillion in the next 10 years.
I wonder if Handbag72 has read Seeking Alpha recently? Their current stories about TMTG are universally scathing. One says
- Trump Media & Technology Group's shares have surged after completing its merger, but the company's user/subscriber growth and financials are disappointing.
- The social media platform has a low estimated user number and is not generating significant revenue, making its high market cap a potential problem.
- The company's projections for user growth have fallen short of initial projections, indicating a lack of universal platform appeal for advertisers.
However, I suspect Handbag is a victim of the sunk cost fallacy and is incapable of admitting error — and will go down with the ship.
Other Truth Social users are less sanguine about their prospects. The user @bill7718 wrote “Come on DJT, every time I buy more, the price drops more. When will it be the BOTTOM!!” Regardless, they posted a chart showing the upward blip of the stock the next day with the optimistic comment “moving!!”. The stock did move — downwards.
The user @manofpeace123 had mixed feelings. They bought shares at $65 and say that 71% of their portfolio was DJT stock. Last Wednesday, they posted that investing in DJT was a way of telling Trump, “I believe in you and I stand with you through good times and bad.” But on Thursday, the user added: “can’t help but feel sad. … feel like I’m trying to catch a falling knife.”
On Sunday, @realJaneBLONDE posted that she was “NOT panicked NOT worried.” Two days later, she posted a message to Trump and congressional Republicans urging them to make it “illegal” to bet against or short-sell stocks. “Sick of MY investment money being stolen!!” They’re stealing peoples money and you’re allowing it!!”
Another user posted a meme image saying, “If you’re worried about your Money, Remember This, DJT stock is about FREE SPEECH & Without FREE SPEECH Money won’t mean much.” This is essentially saying it is OK to lose all your money as long as you are free to complain about it.
Now TMTG has announced plans to offer more stock — likely driving the price down — even some faithful have grasped that the future is not rosy. User @seneca1950 asked whether anyone was concerned that the company’s upcoming plans to issue tens of millions more shares would sink the stock price.
Predictably, two other accounts criticized seneca1950 for spreading “FUD” — fear, uncertainty, and doubt. Jesus Revolution 2024 wrote, “Are you a Fudster,” Rabristol kvetched, “You must be short with no way out!”
Others have accepted that their money is gone. User @BingBlangBlaow said they were embarrassed to be so “deep in the red” and questioned why “everyone [was] acting like everything is fine.”
However, some Trump apologists say it is not about the money. They claim investing in DJT is a move to defend yourself against government overreach. Chad Nedohin, a Canadian investor and prominent cheerleader of the stock responded to @BingBlangBlaow by saying, “No [one’s] fine with it, but we are DJT now. The deep state is making their run at Trump … and us.”
Carol Swain, a prominent conservative commentator in Nashville, said she invested $1,000 in Trump Media stock at $48 a share, over the objections of her financial adviser, who predicted the stock would dive. Swain was blasé about her fiscal prospects. But claimed making money was not the aim of her investment strategy.
“If I lose it, fine. If I make a profit, wonderful. But at the end of the day, I wanted to show my support. There’s such an effort to destroy him and strip his wealth away, and so much glee about it. I would like to see him be a winner.”
I will let Jerry Dean McLain (we first met him at the top of this piece) have the last word. As WaPo reports
McLain, the tree service owner in Oklahoma, said he believes the stock could “go to $1,000 a share, easy,” once the media stops writing so negatively about it and the company works through its growing pains. The company’s leaders, he said, are being “too silent right now” amid questions about the falling share price, but he suspects it’s because they’re working on something amazing and new.
“This isn’t just another stock to me. … I feel like it was God Almighty that put it in my lap,” he said. “I’ve just got to hold on and let them do their job. If you go on emotion, you’ll get out of this thing the first time it goes down.”
If anyone has a bridge to sell, give Jerry a call. Say you represent Trump. Cash the check.