The Trump Media & Technology Group (DJT) stock price has done well following the November election in the United States. DJT bottomed at $26.60 on November 14 and has jumped to $40, a 50% increase. So, is this a good stock to buy after Donald Trump’s inauguration to become the 47th president of the United States?
Trump Media could benefit from his presidency
There are rising chances that Trump Media, the operator of Truth Social, will benefit from the Trump presidency. There is precedence into this in that his Washington hotel receives millions of dollars from lobbyists and foreign governments.
Therefore, many governments and lobbying firms will likely start advertising on the platform to attract his attention. Some companies seeking favor with the new administration may also start advertising on the platform.
Trump Media could also benefit since Trump is the head of the executive branch. In this, he may direct agencies in the branch to start using the platform for official communication. Most government agencies rely on social media platforms like X and Facebook.
Core challenges remain
Still, Trump Media faces an uncertain future even with Trump being the president. For one, Trump has re-embraced social media platforms like X and Facebook, where he has more followers.
At the same time, data shows that website traffic has plummeted in the past few months. In December, it had over 13.53 million visitors, a 20% drop from the previous month. 13.5 million monthly traffic is fairly small for a company valued at over $6 billion.
A good example is BuzzFeed, a media company with a market cap of over $110 million. SimilarWeb data shows that website traffic in December was 97.40 million, a 7.7% increase from the previous month. The Daily Beast and HuffPost had over 20.2 million and 50.3 million visitors, respectively.
TruthSocial’s traffic was also much lower than other social media platforms like Reddit and X. This means that the company will likely struggle to attract any meaningful advertisers except those seeking favor with the new administration.
Historically, companies have been highly selective of where they allocate their ad dollars. Most of them are afraid of advertising in companies that seem to be toxic, including Elon Musk’s X and Rupert Murdoch’s Fox.
Read more: What Donald Trump’s presidency means for DJT’s future: everything investors need to know
Therefore, all this means that TruthSocial and the company’s streaming division will struggle to make any revenue and profits.
The most recent results showed that the company had an operating loss of $23.7 million and a net loss of over $19.2 million. It made just $1 million n revenue and $4.7 million in net investment income.
The company has over $673 million in cash and no debt, but the cash burn will see its resources dwindle in the next few quarters. As such, a potential solution would be to copy MicroStrategy and start embracing a Bitcoin strategy since the social media approach is not working.
DJT stock price analysis
The daily chart shows that the Trump Media stock price has rebounded in the past few weeks and has moved above $40. It formed a golden cross pattern as the 50-day and 200-day moving averages crossed each other.
DJT stock has also formed an inverse head and shoulders chart pattern, a popular bullish sign. Therefore, the short-term outlook is where the stock rises and hits the crucial resistance level at $54.6, its highest swing in October last year.
The long-term outlook for the DJT stock is extremely bearish unless the company makes major changes such as a Bitcoin strategy.
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