It is no surprise that Trump Media & Technology Group (NASDAQ:DJT) is up 6% in noontime trading following Donald Trump’s spectacular election victory. Yet that is well below the 20% surge it posted when it burst out of the gate at the stock market’s open.
Still, because Trump could use the Truth Social social media platform to broadcast his message from the White House, that could draw in many more users wanting to follow him and hear what he has to say. Truth Social is still relatively unknown, but that could rapidly change. Does that make DJT stock doubling from its current price a possibility?
24/7 Wall St. Insights:
- Trump Media & Technology Group (DJT) raced to a 20% gain at the market open after Donald Trump’s presidential election victory.
- It failed to hold onto most of those gains, but its Truth Social social media platform should have a higher profile for the next four years as the president uses it to speak to people.
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A volatile play
Trump Media & Technology Group has a difficult road ahead in breaking through the dominance of other platforms
Trump Media & Technology has had a rocky start since its debut in late March. The initial surge turned into a rout and then back up again. As the presidential campaign played out over the summer, shares of DJT fell. It got a major boost once more after the first failed assassination attempt in July, but quickly resumed its downward spiral.
Only in the last few weeks did the social media company begin to trend higher again as momentum built behind the president’s candidacy. That it should surge after he finally won should have been expected. Yet the inability of DJT to hold onto the dramatic gains calls into question whether it can keep the momentum going. In fact, it suggests the stock won’t double from here and may very well return to its lows.
Bigger, better competition
The problem with Truth Social is it is a shell of other bigger and arguably better platforms. Meta Platforms (NASDAQ:META | META Price Prediction) has well over 3 billion daily active users (DAU) across its family of apps, including Facebook and Instagram. Snap (NASDAQ:SNAP) has 433 million DAU while Elon Musk’s X has over 600 million monthly active users.
That number is likely to have increased significantly as the election grew to a close because X is the No. 1 app for news on the App Store. People turn to it instead of the legacy media for up-to-date, unfiltered news.
In contrast, Truth Social doesn’t post its user numbers. It says because it is a new site, those numbers don’t matter and focusing on traditional metrics like that would distract management and the markets from what it is trying to build. While the number has probably grown to a degree, X is really sucking all the oxygen out of the room. It will be hard to compete against it, particularly because of Musk’s close alignment with Trump.
A tough act to follow
While Trump does regular post on Truth Social, most of those posts quickly make their way over to X. And since Musk was instrumental in helping Trump win, and will play an important role in his administration, the focus will remain with X and not Truth Social.
In the end, DJT stock will be a trading stock. Its volatility will make it ripe for short-term traders trying to snatch a gain on a news cycle. That’s not the way I invest and I would encourage you to avoid it as well, but expecting Trump Media & Technology to double is unrealistic.
The stock will rise and fall based on the personality and pronouncements of the once-and-future president. It is much too erratic to invest in and has little to offer in the way of solid growth prospects. So even if you are an ardent support of President Trump, there are better places for your money.
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