Are you, like Cheeto Hitler, "tired of all this winning?" Well then, it may be time to invest in Trump stock. Trump Media & Technology Group stock, NASDAQ ticker symbol DJT (what else?) is currently trading at $34.26 per share, down on the day and well down from the closing share price on its first day of trading ($57.99).
How could this happen?! The report linked below provides a decent explanation as to why.
www.msnbc.com
For those of you who are disinclined to click on the above link and read the entire report, here are a few salient paragraphs.
By customary investment rules, Trump Media & Technology Group (DJT) should still be privately held. For one, Digital World Acquisition Co., the public company that merged with Trump Media on March 26, had previously hit rocks that would have sunk any other ship. DWAC on several occasions had postponed its scheduled purchase of Trump Media, had been fined $18 million by the SEC and been forced to restate its previous filings, had lost its institutional investors and changed its accounting firm.
The news became stranger yet on March 26 when, against the tide, the merger proceeded, permitting Trump Media to become publicly listed. The stock’s closing price of $57.99 valued the company at roughly $9 billion. (Don’t believe any authoritative statement about Trump Media’s stock-market value, because nobody knows what it is due to the company’s complex stock issuance structure.) However, by any rules previously known to mankind, that amount far surpassed what the stock could bear.
Let me explain: In 2023, Trump Media received $4.1 million in revenues. Most news accounts of Trump Media’s financial report emphasized the company’s $58 million loss that year, but that amount of red ink, by itself, isn’t the problem. There’s nothing amiss with losing money to make money. The problem for Trump Media is that its sole operation, Truth Social, is highly unlikely to ever make money. Not only were its annual sales paltry — only slightly above that of a typical McDonald’s franchise — but those sales dwindled as the year progressed. The platform headed in the wrong direction.
Valuing a shrinking $4 million business at $9 billion is the greatest feat of chutzpah I have ever seen in the U.S. stock market, and I think we should stop and consider the magnitude of that statement. Although Trump Media’s stock price has since dropped sharply, the company’s market capitalization remains near $6 billion, which gives the stock a price/sales ratio of roughly 1,500.
Sound high? Oh, yes. When Tesla (TLSA) went public in 2010, with revenues that had increased 17 times over the previous three years, its price/sales ratio was 23. When Google, now Alphabet (GOOGL), went public in 2004, with year-over-year revenue growth of 147%, its price/sales ratio was 14. When Facebook, now Meta Platforms (META), went public in 2012 with a 35% one-year growth rate, its price/sales ratio was 20.
You get the point. Historically, investors have determined that groundbreaking products in new industries are worth about 20 times current sales. Yet, Trump Media commands a price/sales ratio of 1,500 or 75 times higher than its predecessors. If investors valued Trump Media’s IPO like they did the initial public offerings of Tesla, Google and Facebook, then Trump Media stock would be selling at 50 cents per share.
So by all means, hang onto that Trump stock, cultists. In fact, buy more. #ETTD (Everything Trump Touches Dies.)
How could this happen?! The report linked below provides a decent explanation as to why.
Opinion | Trump Media is more of a club membership than a traditional stock
Valuing a shrinking $4 million business at $9 billion is one of the greatest feats of chutzpah ever in the U.S. stock market.
www.msnbc.com
For those of you who are disinclined to click on the above link and read the entire report, here are a few salient paragraphs.
By customary investment rules, Trump Media & Technology Group (DJT) should still be privately held. For one, Digital World Acquisition Co., the public company that merged with Trump Media on March 26, had previously hit rocks that would have sunk any other ship. DWAC on several occasions had postponed its scheduled purchase of Trump Media, had been fined $18 million by the SEC and been forced to restate its previous filings, had lost its institutional investors and changed its accounting firm.
The news became stranger yet on March 26 when, against the tide, the merger proceeded, permitting Trump Media to become publicly listed. The stock’s closing price of $57.99 valued the company at roughly $9 billion. (Don’t believe any authoritative statement about Trump Media’s stock-market value, because nobody knows what it is due to the company’s complex stock issuance structure.) However, by any rules previously known to mankind, that amount far surpassed what the stock could bear.
Let me explain: In 2023, Trump Media received $4.1 million in revenues. Most news accounts of Trump Media’s financial report emphasized the company’s $58 million loss that year, but that amount of red ink, by itself, isn’t the problem. There’s nothing amiss with losing money to make money. The problem for Trump Media is that its sole operation, Truth Social, is highly unlikely to ever make money. Not only were its annual sales paltry — only slightly above that of a typical McDonald’s franchise — but those sales dwindled as the year progressed. The platform headed in the wrong direction.
Valuing a shrinking $4 million business at $9 billion is the greatest feat of chutzpah I have ever seen in the U.S. stock market, and I think we should stop and consider the magnitude of that statement. Although Trump Media’s stock price has since dropped sharply, the company’s market capitalization remains near $6 billion, which gives the stock a price/sales ratio of roughly 1,500.
Sound high? Oh, yes. When Tesla (TLSA) went public in 2010, with revenues that had increased 17 times over the previous three years, its price/sales ratio was 23. When Google, now Alphabet (GOOGL), went public in 2004, with year-over-year revenue growth of 147%, its price/sales ratio was 14. When Facebook, now Meta Platforms (META), went public in 2012 with a 35% one-year growth rate, its price/sales ratio was 20.
You get the point. Historically, investors have determined that groundbreaking products in new industries are worth about 20 times current sales. Yet, Trump Media commands a price/sales ratio of 1,500 or 75 times higher than its predecessors. If investors valued Trump Media’s IPO like they did the initial public offerings of Tesla, Google and Facebook, then Trump Media stock would be selling at 50 cents per share.
So by all means, hang onto that Trump stock, cultists. In fact, buy more. #ETTD (Everything Trump Touches Dies.)
