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USA Today
10 hours ago
- Business
- USA Today
Is Trump Media stock a buy after dropping over 50% from its 52-week high?
Is Trump Media stock a buy after dropping over 50% from its 52-week high? Show Caption Hide Caption What is 'TACO trade,' a new phrase angering President Trump? 'TACO trade' is a jab at President Donald Trump's propensity to impose or threaten tariffs and later back off. Perhaps no stock's performance is more impacted by President Donald Trump's actions than Trump Media & Technology Group (NASDAQ: DJT). Although the Trump administration's recent tariff policies affected the entire stock market, Trump Media has specifically stated its success depends in part on President Trump's popularity. This has played out in Trump Media's share price, which zoomed up to a 52-week high of $54.68 just days before the presidential election. But economic uncertainty fueled by inflation and further impacted by the dynamic tariff situation sank the company's stock. At the time of this writing, its share price is less than half what it was before Donald J. Trump's election win. Does this bring Trump Media shares into buy territory? Or do reasons exist to avoid the stock? Let's dig into the company to find out. Trump Media's business performance Trump Media relies entirely on revenue from digital advertising run on Truth Social, its social media platform. The company also provides consumers a streaming video product, Truth+, and recently announced a financial offering called However, by the end of the first quarter, neither Truth+ nor had produced income. Trump Media's sole source of sales, Truth Social, delivered $821,200 in Q1 revenue, a 7% increase from the prior year. This is a promising start to 2025 since the company ended 2024 with a 12% year-over-year decline in sales to $3.6 million. In addition, Trump Media boasts a strong balance sheet. Total assets were $918.9 million compared to $27.2 million in total liabilities at the end of Q1. The company has amassed a war chest of $759 million in Q1 cash, cash equivalents, and short-term investments. But that's where Trump Media's strengths end. Areas of concern with Trump Media An investment in Trump Media carries several outsized risks. Perhaps the biggest is that 93% of its revenue comes from a single customer. If that client decides to leave, Trump Media's income collapses. Also, the company is standing on shaky financial ground. Trump Media is not profitable, with a Q1 net loss of $31.7 million. This is because its Q1 operating costs totaled $40.4 million. But a greater issue is the tepid revenue generated from Trump Media's offerings. Truth Social's sales aren't covering its expenses, so it's crucial for the company's new Truth+ and products to provide income soon. Another concern is that Trump Media noted in its Q1 earnings report that there existed "material weakness in our internal controls over financial reporting," and it lacked "accounting personnel who have the requisite experience in [Securities and Exchange Commission] reporting regulation." This means its financial statements could contain errors and, depending on the extent of those mistakes, may lead to a misrepresentation of Trump Media's finances. Although the firm is working to address this issue, the integrity of its earnings reports is questionable at this time. Making a decision on Trump Media stock Trump Media is in a precarious predicament, given the high costs of operating its business relative to the meager sales it's bringing in. However, its emerging products might deliver the revenue Trump Media desperately needs, and its excellent balance sheet can sustain the company while these products build up their income streams. So, does the company's substantial stock price drop from its 52-week high tip the decision toward purchasing shares? Answering this question requires assessing whether its stock valuation is reasonable. You can gauge this with the price-to-sales (P/S) ratio, which tells you how much you're paying for every dollar of revenue the company earned during the trailing 12 months. This metric is commonly used to evaluate stocks for unprofitable businesses, such as Trump Media. Over the past year, the company's P/S multiple has undergone wild swings. Although it's not at its peak at the time of this writing, it's still exceedingly elevated, suggesting the stock is overpriced despite falling more than 50% from its high. Given a pricy stock combined with significant risks, such as the potential for financial reporting errors and reliance on a single customer for nearly all its revenue, Trump Media shares are not a good investment at this time. Perhaps the company deserves another look if its Truth+ and products eventually generate sales. For now, there aren't enough compelling reasons to buy Trump Media stock. Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. Should you invest $1,000 in Trump Media & Technology Group right now? Offer from the Motley Fool: Before you buy stock in Trump Media & Technology Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Trump Media & Technology Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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Yahoo
21 hours ago
- Business
- Yahoo
Trump Media Plunges 13% Despite $2.5B Bitcoin Treasury Play: Market Questions Bold Crypto Pivot
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Trump Media and Technology Group (NASDAQ:DJT) announced a $2.5 billion capital raise to purchase bitcoin for its corporate treasury, marking another high-profile entry into the 'corporate bitcoin strategy' playbook. While the move follows MicroStrategy's (NASDAQ:MSTR) wildly successful template, investors should carefully evaluate whether this represents sound financial strategy or speculative positioning tied to political branding. The market's initial response to the bitcoin strategy announcement was decidedly negative. Shares of Trump Media dropped 13% on Tuesday, falling from $27 to $23, suggesting significant investor skepticism about the bold treasury transformation. This decline occurred despite the broader crypto-positive sentiment in markets, indicating concerns specific to the company's execution capabilities or valuation implications of the capital raise. Don't Miss: — no wallets, just price speculation and free paper trading to practice different strategies. Grow your IRA or 401(k) with Crypto – . Trump Media's fundraising approach reveals a sophisticated capital structure designed to minimize immediate dilution while capitalizing on current market conditions: Equity Component: $1.5 billion through stock sales at the last closing price Debt Component: $1 billion in convertible notes priced at a 35% premium This mixed approach allows the company to raise substantial capital while giving investors upside participation through the convertible feature. The 35% premium on the convertible notes suggests strong investor appetite, though it also indicates the speculative nature of the investment thesis. However, the immediate 13% stock decline suggests the market may be concerned about dilution or execution risk despite the structured approach. Trump Media's move comes as corporate bitcoin adoption has evolved from experimental to mainstream among certain sectors: MicroStrategy's Success Story: The business intelligence company, now rebranded as Strategy, has become the poster child for corporate bitcoin investment. With $23.91 billion in crypto assets and shares that gained over 600% in 2024, MicroStrategy proved that aggressive bitcoin positioning can create extraordinary shareholder value. Market Capitalization Impact: Strategy's market value reached nearly $94 billion, demonstrating how bitcoin holdings can dramatically amplify a company's valuation beyond its core operating business. Emerging Trend: Companies, including GameStop (NYSE:GME) and various biotech firms, have attempted to replicate this success, though with mixed results. Current Financial Foundation Trump Media brings several advantages to this strategy: Cash Position: $759 million in existing cash and short-term investments provides a solid foundation Custody Infrastructure: Partnerships with Anchorage Digital and ensure institutional-grade security Political Alignment: The company benefits from the Trump administration's pro-crypto stance Strategic Rationale CEO Devin Nunes framed the investment as acquiring 'crown jewel assets consistent with America First principles,' positioning bitcoin as an 'apex instrument of financial freedom.' This messaging aligns perfectly with the current administration's digital asset embrace and could resonate with the company's target demographic. Risk Factors to Consider Execution Risk: Unlike MicroStrategy which has years of experience managing large bitcoin positions, Trump Media is new to crypto treasury management. Business Model Diversification: The company is simultaneously pursuing financial services expansion, M&A opportunities, and various crypto ventures, potentially spreading focus thin. Regulatory Exposure: Heavy bitcoin positioning creates vulnerability to potential regulatory changes, despite current favorable conditions. Market Confidence: The immediate 13% decline suggests investors may be questioning whether Trump Media can successfully execute this complex strategy or whether the valuation premium is justified. Trending: New to crypto? on Coinbase. Current Crypto Environment The timing appears strategically sound from a macro perspective: Bitcoin recently achieved new all-time highs above $111,000 Institutional adoption continues accelerating Regulatory environment under Trump administration remains crypto-friendly Corporate treasury adoption gaining mainstream acceptance Competitive Landscape The announcement of Twenty One Capital – valued at $3.6 billion – through Cantor Fitzgerald, Tether, and demonstrates continued institutional interest in bitcoin-focused investment vehicles. This validates the thesis that bitcoin treasury strategies can attract significant capital. For DJT Shareholders Potential Upside: Leveraged exposure to bitcoin price appreciation Multiple expansion similar to MicroStrategy's experience First-mover advantage in politically aligned crypto investing Key Risks: Bitcoin volatility could dramatically impact share price Execution risk from management team without crypto experience Potential dilution from the equity raise Market skepticism evidenced by the 13% decline suggests investors remain unconvinced about the strategy's merit Broader Market Impact This move reinforces several important trends: Corporate bitcoin adoption becoming standard practice for certain company types Political alignment increasingly influencing investment strategies Traditional revenue diversification giving way to balance sheet diversification Trump Media's bitcoin strategy appears well-timed and properly structured, but success will depend on execution and market conditions. The company benefits from favorable political winds and proven demand for bitcoin-leveraged equity exposure. However, the immediate 13% stock drop from suggests the market views this as a high-risk transformation that may not justify current valuations. Investors should recognize this as a high-risk, high-reward play that transforms Trump Media into a bitcoin proxy with social media operations attached. Key factors to monitor: Bitcoin price performance and its impact on DJT's market valuation Successful deployment of the $2.5 billion into bitcoin positions Integration of crypto strategy with existing business operations Market confidence recovery following the initial 13% decline Regulatory developments that could impact crypto-heavy corporate strategies Trump Media's bitcoin bet represents a calculated attempt to replicate MicroStrategy's success while leveraging political alignment and timing. However, the immediate market reaction suggests significant investor skepticism about execution risk and valuation concerns. While the strategy has proven successful elsewhere, the market's negative response indicates investors must weigh the potential for extraordinary returns against substantial execution risks and dilution concerns. The move signals continued mainstream adoption of corporate bitcoin strategies, but Trump Media's individual success will depend on management execution, market timing, and the company's ability to restore investor confidence while managing a complex transformation from social media company to diversified financial services and crypto investment vehicle. For investors, this represents a leveraged bet on both bitcoin appreciation and Trump Media's ability to overcome market skepticism while executing one of the most ambitious corporate treasury transformations in recent memory. Read Next: A must-have for all crypto enthusiasts: . 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Image: Shutterstock Send To MSN: 0 This article Trump Media Plunges 13% Despite $2.5B Bitcoin Treasury Play: Market Questions Bold Crypto Pivot originally appeared on
Yahoo
a day ago
- Business
- Yahoo
Trump Media to raise $2.5 billion to invest in bitcoin
(Reuters) -Trump Media and Technology Group will raise about $2.5 billion to invest in bitcoin, U.S. President Donald Trump's social media company said on Tuesday, as it looks to diversify its revenue. The company is raising the funds by selling $1.5 billion in stock at its last closing price and $1 billion in convertible notes priced at a 35% premium, it said in a statement. The bitcoin will be held on Trump Media's balance sheet alongside existing cash and short-term investments totaling $759 million as of the end of the first quarter. Crypto platforms Anchorage Digital and will provide custody for the bitcoin holdings. "We view bitcoin as an apex instrument of financial freedom," Trump Media CEO Devin Nunes said, hailing the move as a "big step forward" in the company's plan to acquire "crown jewel assets consistent with America First principles." Shares of the company behind Truth Social, a streaming and social media platform, were down 8%. The move is part of a recent trend of public companies adding bitcoin and other cryptocurrencies to their balance sheets to capitalize on rising token prices as the Trump administration embraces digital assets. Strategy - formerly known as MicroStrategy - has long been an aggressive investor in bitcoin and saw its shares soar more than six-fold last year, taking its market value to almost $94 billion. The company held $23.91 billion in crypto assets at the end of 2024. Several other companies have tried to replicate Strategy's success, including GameStop and several biotech firms. Last month, Cantor Fitzgerald announced that it would team up with Tether and SoftBank Group to launch Twenty One Capital, a bitcoin-buying entity that formed from a merger with blank-check vehicle Cantor Equity Partners. The combined vehicle is valued at $3.6 billion. Trump Media has been exploring potential mergers and acquisitions as it aims to diversify into financial services. Last month, it reached a binding agreement to launch various retail investment products, including crypto and exchange-traded funds aligned with Trump's policies. The Trump family, long rooted in skyscrapers and country clubs, has opened multiple beachheads in crypto, quickly gaining hundreds of millions of dollars. Those other crypto forays include Trump NFTs, a meme coin, a stake in a newly formed bitcoin producer called American Bitcoin and World Liberty Financial, a decentralized crypto platform that also offers a stablecoin pegged to the U.S. dollar. But the crypto push has attracted scrutiny from lawmakers, including Democratic Senator Elizabeth Warren, who last month asked the U.S. securities regulator about its plans to supervise ETFs due to be launched by Trump Media.
Wall Street Journal
a day ago
- Business
- Wall Street Journal
Podcast: Stocks Rise After Trump Agrees to Delay EU Tariffs
The Dow Jones Industrial Average adds 1.8%, while the S&P 500 gains 2.1% and the Nasdaq surges 2.5%. Plus: Tesla stock rises after Chief Executive Elon Musk says in a social-media post that he is "back to spending 24/7 at work." Profit slides at Temu's Chinese owner, PDD. Trump Media plans to raise $2.5 billion from investors to buy bitcoin. 🎧 Listen: Ariana Aspuru hosts the Minute Briefing podcast.
Yahoo
a day ago
- Business
- Yahoo
Trump Media eyes Bitcoin reserve with €2.3 billion investor backing
About 50 institutional investors will put up $1.5 billion (approximately €1.38bn) in the private placement for common shares in the company and another $1 billion (around €920 million) for convertible senior notes, according to Trump Media and Technology Group, the operator of Truth Social and other companies. Trump Media said it intends to use the proceeds for the creation of a 'bitcoin treasury.' 'This investment will help defend our company against harassment and discrimination by financial institutions, which plague many Americans and US firms," Trump Media CEO and Chairman, Devin Nunes, said in prepared remarks. Shares of Trump Media & Technology Group Corp., based in Sarasota, Fla., tumbled 9% following the update. Other companies have adopted similar strategies through cryptocurrency. Cloud and mobile software developer MicroStrategy Inc. has built up a treasury reserve containing billions worth of bitcoin through stock sales and debt financing. Trump, who referred to cryptocurrencies in his first term as 'not money,' citing volatility and a value "based on thin air," has shifted his views on the technology. During an event at his Mar-a-Lago club in Florida during his presidential campaign in May 2024, Trump received assurances that crypto industry backers would spend lavishly to get him reelected. Last week, Trump rewarded 220 of the top investors in one of his other cryptocurrency projects — the $Trump meme coin —with a dinner at a luxury golf club in Northern Virginia, spurring accusations that the president was mixing his duties in the White House with personal profit. 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤
