After Donald Trump's recent election victory, his media company, Trump Media & Technology Group, has faced extreme stock volatility, raising concerns among investors about its future viability. While the election brought some momentary excitement, analysts are questioning whether the excitement can translate to long-term success.
On November 5, when Trump was declared the winner, shares of Trump Media surged by nearly 6 percent. This enthusiasm was short-lived, as the stock saw dramatic declines soon after. By mid-afternoon on November 6, it dropped by more than 20 percent, as investors appeared to be cashing out from the temporary spike. Profit-taking among early investors followed the pattern often seen during electoral events when emotions can drive stock prices up before settling back again.
According to CNBC, the tumultuous trading on November 6 was fueled by profit-taking from investors who knew the election bump might not translate to sustained growth. Trump Media's stock has acted much like a meme stock, fluctuated significantly based on Trump's electoral prospects rather than business fundamentals. When the excitement of the election fades, investors are left contemplating the realities of the company’s future.
One of the key issues affecting Trump Media's future is the inability to convert electoral victories and media appearances to meaningful financial success. A surprise filing from the company revealed it incurred more than $19 million in losses during the third quarter of 2024, accumulating net losses of $363 million for the first nine months of the year. This stark financial reality starkly contrasted with expectations set by Trump's victory.
Trading for Trump Media’s stock was halted multiple times as it plunged during the lead-up to the elections. Earlier trading session issues had already created concerns for investors. Many were anticipating gains following his election and hoped to capitalize on Trump's influence, but the trends quickly shifted to reflect grave fundamentals of the business.
The underlying dynamics of Truth Social, where Trump's online assertions largely reside, create barriers to future growth. The platform has not achieved significant user engagement or revenue generation, effectively limiting its attractiveness to investors. Its ability to lure lucrative ad contracts has been hampered due to its niche status. Without Trump’s political capital driving the business, it is unclear how the platform will sustain itself.
Trump’s stock maneuvers also raise questions. The media mogul holds approximately 58 percent of Trump Media’s stock. While this means he has significant financial power, it also implies potential volatility for those who invest or donate expecting returns. For every dollar Trump Media's stock price climbs, it directly benefits Trump, whose own net worth grows alongside it.
Following the election, analysts have reiterated their skepticism about its viability. Gabe Ross of TipRanks noted, “The company lacks a clear business plan and unique offerings.” He posits the company’s future as contingent on the uncertain path of its social media component, which he fears will not attract enough user engagement or revenue to make it sustainable long-term.
Disappointing user engagement metrics and the lack of clarity on monetization strategies have painted a bleak picture. The company's recent report reiterates fears about its finances: it generated only $2.6 million against $19 million losses. It appears Trump Media has not effectively transitioned his political capital and fame from electoral success to business capability.
Despite the rollercoaster of stock prices post-election, many analysts predict the status quo for Trump Media is far from optimistic. Investors are now left weighing the effects of Trump's presidency on the media company's future viability. Can it reinvigorate and realign itself with sustainable practices? Or will it remain just another fading media venture amid the shifting political tides?
