Trump Media & Technology Group (NASDAQ:DJT) is in the spotlight as the 2024 presidential election heads into its final days. With polls in battleground states remaining neck-and-neck, betting markets are beginning to favor a Trump victory.
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A Trump win is seen by some as potentially beneficial for his social media company, given the close ties between DJT’s stock performance and his political prospects. Reflecting this connection, the stock has soared 220% since its low point in late September.
However, top investor Mike Fay remains unconvinced that a Trump election victory would ultimately benefit shareholders.
“Despite its recent surge in price, I think going long DJT shares is the wrong way to play that election result if it does indeed come to fruition,” writes the 5-star investor, who is in the top 3% of all TipRanks’ stock pros.
Fay is critical of the company’s financials, noting that DJT has yet to post a profitable quarter, and its valuation of $7.8 billion appears highly inflated compared to its 2024 revenue of just $1.6 million.
“The company is trading at over 1,100x sales,” writes the investor. “This is obviously a preposterous number and not the right way to value equity.”
However, the investor’s larger concern with DJT is the company’s seeming lack of a realistic path forward now that Elon Musk has allowed X (previously known as Twitter) to house more controversial viewpoints. If Truth Social was founded as the place for more contentious voices, X has now allowed these accounts –including Trump’s – to run wild and free. Hence, there is not much to the argument that a user would need to move to Truth Social in order to be able to post unfiltered, especially with the costs of switching so high.
“Since most of these platforms are walled gardens, a user can’t take their followers with them from platform to platform,” Fay notes, adding that such migrations rarely, if ever, happen.
Fay also points to Trump’s divisive reputation as another obstacle for DJT. With around half the population viewing Trump unfavorably, and a sizable portion of his base already active on X with its massive user base, DJT’s growth prospects appear limited.
“Take the money and run,” concludes Fay, giving DJT a Strong Sell rating. (To watch Mike Fay’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
