Trump Media Stock Nosedives 70%: Valuation Concerns Mount Amid Losses and Insider Selling

Trump Media Shares Plummet 70% Since March IPO, Valuation Concerns Mount

Shares of Trump Media & Technology Group have experienced a dramatic 70% decline since the company’s public debut in March, raising questions about its valuation and future prospects. Despite the significant sell-off, the company still maintains a market value of approximately $3 billion.

Jay Woods, chief global strategist at Freedom Capital Markets, expressed skepticism about the company’s current valuation. “The numbers simply don’t add up,” Woods stated, referring to the company’s recent financial performance.

According to Bloomberg data, Trump Media reported sales of $837,000 in the last quarter, coupled with a net loss of $16.4 million. These figures have led to concerns about the company’s price-to-sales ratio, which currently stands at an astronomical 1,864 times. Over the trailing twelve months, the company has generated less than $2 million in revenue.

Woods emphasized that the current valuation is “unjustifiable” based on these financial metrics. He also pointed out potential growth and user retention issues facing Trump Media’s primary product, Truth Social. The platform’s growth potential may be limited due to its political nature, and it has struggled with user retention and expansion.

Adding to the company’s challenges is the increasing use of competitor X (formerly Twitter) by former President Donald Trump himself. This shift in social media usage could potentially impact Truth Social’s user base and engagement levels.

Market dynamics are also playing a role in the stock’s decline. The end of the lock-up period for insiders to sell shares has led to significant selling pressure. United Atlantic Ventures, for instance, has divested nearly their entire 11-million-share stake in the company.

Perhaps the most significant risk factor looming over Trump Media is the potential for Donald Trump to sell his 57% ownership stake. While Trump has previously stated he won’t sell his shares, there are no guarantees. Woods warned that if Trump decides to sell, it could trigger a panic among investors and lead to a major decline in share value.

As Trump Media continues to face these challenges, investors and market analysts will be closely watching the company’s financial performance and strategic decisions in the coming months.