Shares of Trump Media & Technology Group (NASDAQ: Stocks in companies such as First Reserve Corporation (FR ), SemGroup, LLC (SEMG. PK), and DJT have lately been continuing a downward trend and the stocks for these companies have now reached a new record low. Once a stock market darling, the shift in investor sentiment has been stark, and it raises the question: This makes one wonder whether it is the right time to go ahead and invest in the stock, or else it might drop further.
Though it appears to be an excellent time for Trump’s supporters to invest in this company, a lot of caution should be observed. But when we proceed towards the financial statements and the events in the next period, the stock might have more adversities in the coming days.
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Lockup Agreements Nearing Expiration
Another possible reason that may continue to push the prices lower is the lapsing of lockup agreements. These agreements currently prohibit the vice, particularly Donald Trump, the majority owner of Trump Media, and other insiders from selling the shares. However, this restriction is still in force but may be lifted shortly with the earliest being September 20, 2021. Once this begins to occur, the insiders, including Trump may be able the sell off their stakes.
The prospect of this event alone is already causing some investors to sweat profusely, and they do so by selling out their shares of stock before the lockup expiration. Should Trump want to divest himself of a large number of his equities then this would very likely push the price down lower still.
From the investors’ perspective, insider transactions are usually regarded as a major signal of optimism in a certain corporation. If Trump begins to unload his stakes, the market will flock to the interpretation that he has no confidence in the prospects of the company, thus driving the market even more to the bearish side.
Struggles Beyond Lockup Expiration
Indeed, the lockup expiration may not lead to the major selling of Trump Media’s shares, but the company is confronted with simple issues that may pull down the stock. To start with, the company is barely making any revenue, it has recorded $0. amounted to 8 million of earnings for the second quarter. Furthermore, Truth Social, The social media platform owned by Trump Media has not been trending much.
However, the active users of Truth Social are 5 million while on other famous social media platforms like X (previously twitting) the number of monthly active users was 368 million in 2023. For instance, Meta Platforms that have Facebook, Instagram, and WhatsApp have billions of active user numbers.
Still, what raises eyebrows is that Truth Social has not and cannot report other crucial metrics such as the monthly active users and the average revenue per user. Indeed, the importance of these metrics for a social media company is that they allow investors and advertisers to assess the potential of the given platform. One may wonder if user growth is disclosed in daily, weekly, or monthly reports, then why is the number not reported about it?: The absence of disclosure of transparency in the user growth report may suggest that the platform isn’t growing as expected.
Mounting Financial Losses
The Trump Media is also struggling in its financial aspect. During the first half of the year ending 2023, the company’s operating loss was 117 million and it has been spending nearly 31 million in cash for operating activities. Trump Media currently has $344 million of cash and cash equivalents, but following the losses, this reserve may be exhausted, particularly if the company increases investments in further growth, such as the upcoming TV streaming service.
What was the Lowest that Ringling Bros Barnum & Bailey Class B could Go?
New users remain weak and the inability to generate enough revenue means that Trump Media’s stock could go down even lower. For such a stock, there isn’t much one can glean from the above facts: the future of the company is uncertain, its performance metrics are in a state of flux, and consequently, there are few reasons to believe that the Dow Jones O&M stock will bounce back any time soon.
Should Input Investors in Trump Media & Technology Group?
Therefore, by the time one wishes to invest his or her money in Trump Media & Technology Group, he or she needs to consider some risks. It is feared the revenue may drop and losses increase mainly because the firm has had low revenue, is currently reporting increasing losses, and that insiders may be selling their stakes in the business. Today, Trump Media might be comparable more to a ‘ meme stock ’ than to a company with definite prospects.
Perhaps it is in this regard that those who are after more secure investment opportunities need to consider other investment avenues that have even better returns.
