It’s another momentous week in an election year that continues to be anything but traditional. Democrats, who were demoralized earlier this summer following a harrowing debate performance by President Joe Biden, have witnessed a remarkable turnaround in their fortunes since he withdrew from the re-election race and threw his support behind his vice president.
But what does the 2024 presidential election have to do with Trump Media & Technology Group (NASDAQ:DJT) — the alternative social media platform launched by Donald J. Trump? According to investor Bill Maurer, the answer is: pretty much everything.
“Perhaps one of the key reasons why Trump Media shares have struggled recently is because the election odds seem to be going against the Republican candidate,” writes the investor.
However, Maurer’s bearish stance on DJT, which has plummeted 58% over the past three months, isn’t driven solely by politics. The company’s net revenues have slumped 30% year-over-year, falling to less than $1 million in the latest quarter, while operating losses have ballooned to $19 million.
Concerns over dilution are also front and center for Maurer, with outstanding shares jumping up to 195 million from 177 million in less than three months.
Furthermore, when it comes to valuation, the investor remains far from convinced that the current share price is justified. “The company trades at over 1,500 times this year’s annualized first half of 2024 sales,” writes Maurer. As a comparison, the investor points out that Meta Platforms is priced at (just) 8.3 times expected revenues.
However, Maurer acknowledged that the fluid political situation could surely swing yet again, which would have a marked impact on DJT. “A Trump win in November could push Trump Media shares substantially higher based on a better reputation, regardless of whether or not the actual business deserves that kind of valuation,” writes Maurer.
Given the high level of uncertainty, Maurer concludes that DJT shares are not for the faint of heart, rating them a Sell. (To watch Maurer’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.
