Trumpmedia (NASDAQ: DJT) stocks see big sell-off in Thursday’s trading. The company’s stock price fell 20.4% as of 2:45 PM ET.
Despite Donald Trump’s victory in the presidential election, Trump Media shares are losing ground today. While there is no new company-specific news for the company or unfavorable political developments for Donald Trump, the social media specialist’s share price is heading lower as investors try to cash in on the stock.
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Even with today’s sell-off, shares of Trump Media are still up about 74% over the past month. The company’s stock price rose over the period, along with polls and analysis suggesting Trump was on track to win the presidential election. After announcing victory for the Republican in the race, Trump Media stock rose 8.9% in yesterday’s trading. But investors are now taking profits on the stock, and the company’s stock price is taking a big pullback.
Over the course of the election, Trump Media was favored as a meme stock play. With the 2024 election looming, investors may be wondering where the next big bullish catalyst for stocks could come from. After yesterday’s gains, today’s big sell-off appears to be driven by a slightly delayed “buy the rumor, sell the news” dynamic.
In the third quarter, Trump Media posted an operating loss of $23.7 million on revenue of $1 million. The company ended the period with cash and equivalents totaling $672.9 million and no debt. Considering the company’s cash supply, the losses the company is posting don’t look very worrying, but it remains to be seen what steps the social media player will take to increase its revenue.
Trump Media’s core business revolves around the Truth Social media platform, and the company recently launched a new streaming service. But Truth Social still has relatively low levels of user engagement and low-level revenue generation, and the streaming service isn’t expected to make a significant contribution to revenue until next year. While these business units still have plenty of time to strengthen and expand, the company’s valuation appears very risky in the context of its recent sales performance.
Despite the big valuation drop today, Trump Media stock is still valued at about $5.7 billion. The company will likely need to achieve explosive revenue growth in the coming years to maintain that valuation or raise it above current levels.
