Investors in Trump Media & Technology Group’s stock are facing a challenging situation as shares of TMTG (DJT) experienced a significant decline of 14% on Tuesday, following an 18% drop on Monday. The company's flagship product, Truth Social, recently announced a major expansion into streaming services, a sector known for its high costs and profitability challenges, as seen with media giants like Disney.
Since its merger with a blank-check acquisition company in late March, TMTG's stock, primarily owned by former President Donald Trump, has plummeted over 70% from its all-time high. Despite still holding a substantial market value, the company is struggling financially and seeking additional funding. Experts caution investors about the stock's high valuation, lacking fundamental support.
In 2023, Trump Media incurred a loss of $58 million while generating only $4.1 million in revenue. To raise capital, the company announced plans to issue 21.5 million more shares to the public, potentially diluting the value for existing shareholders.
Truth Social's recent foray into streaming failed to excite investors, with the platform aiming to offer live news, religious programming, and family-friendly content that has faced censorship or suppression on other platforms. The company's CEO highlighted the initiative as a means to provide a platform for content creators who have been marginalized elsewhere.
While drawing parallels to Elon Musk's X platform, which emphasizes free speech, Truth Social lags significantly in user base and struggles to attract advertisers. The valuation of TMTG appears to be largely driven by Trump's association with the brand, turning the stock into a meme stock influenced more by emotions than financial performance.
Following the stock's decline, Trump's net worth has decreased by approximately $300 million, dropping from a peak of $5.2 billion to around $1.8 billion. The company's future prospects remain uncertain as it grapples with financial challenges and investor skepticism.
