What is the new phrase “Tachtostrade” that angers President Trump?
“Taco Trade” is a jab where President Donald Trump tends to impose tariffs, threaten, and return later.
Perhaps there is no stock performance that affects President Donald Trump’s actions as much as Trump Media Technology Group (NASDAQ: DJT). The Trump administration’s recent tariff policies have affected the entire stock market, but Trump’s media specifically states that its success depends in part on President Trump’s popularity.
This is rolling out at Trump Media’s stock price, expanding to a 52-week peak of $54.68 just days before the presidential election. However, economic uncertainty, supported by inflation and further affected by dynamic tariff conditions, has sunk the company’s stocks. At the time of writing, its stock price is less than half of the stock price before it won the election for Donald J. Trump.
Does this bring Trump’s media share to the territory of purchase? Or is there a reason to avoid stocks? Find out more about your company.
Trump Media’s Business Performance
Trump Media is entirely dependent on revenue from digital advertising executions on social media platform Truth Social. The company also provided consumers with Truth+, a streaming video product, and recently announced a financial offering called Truth.fi. But by the end of the first quarter there was no truth+, no truth or true.
Trump Media’s sole source of sales, Truth Social, won $821,200 in first quarter revenue, up 7% from the previous year. This is a promising start to 2025, since 2024 ended in 2024 and sales fell 12% year-on-year to $3.6 million.
Additionally, Trump Media boasts a strong balance sheet. Total assets were $918.9 million, while total liabilities at the end of the first quarter were $27.2 million. The company is collecting a $759 million war chest in first quarter cash, cash equivalents and short-term investments. But that’s where the strengths of the Trump media end.
Areas of concern for Trump media
Investing in Trump media poses several traits of risk. Perhaps the biggest thing is that 93% of revenue comes from a single customer. If that client decides to leave, Trump Media’s revenues will collapse.
The company also stands in a volatile financial setting. Trump Media is not profitable, with a net loss in the first quarter of $31.7 million. This is because the operating costs totaled $40 million in the first quarter.
But the bigger problem is the slippery revenue generated from the Trump media offering. Since Truth Social’s sales do not cover costs, it is important that the company’s new Truth+ and Truth.fi products provide immediate revenue. Another concern is that Trump Media pointed out in its first quarter revenue report that there was a “significant debilitating in internal control over financial reporting” and that there was a shortage of “accounting personnel with the necessary experience in the Securities and Exchange Commission reporting rules.”
This means that there may be errors in its financial statements, which can lead to misrepresentation of Trump Media’s finances, depending on the scope of these errors. The company is working to address this issue, but at this point the integrity of its revenue report is questionable.
Make decisions about Trump’s media stocks
Trump’s media is in a volatile state given the high cost of running their business compared to the smallest sales that are invading. But its emerging products can bring the revenue Trump Media desperately needs, and its excellent balance sheet allows these products to maintain the company while building revenue streams.
So is the company’s substantial stock price from its 52-week high below its decision to buy the stock? To answer this question, you need to assess whether the stock valuation is reasonable.
This can be measured by the ratio of price to sale (P/S). This gives you an idea of how much money your company will pay for each revenue it earns over the course of 12 months. This metric is commonly used to assess stocks in unprofitable businesses such as Trump Media.
Data by ycharts. PS ratio = price to sales ratio.
Over the past year, the company’s P/S multiples have undergone wild fluctuations. Although it has not reached its peak at the time of this writing, it is still rising so much that it suggests that stocks are too high despite falling more than 50% from the high.
With expensive stocks combined with significant risks such as potential financial reporting errors and almost all of the revenues of relying on one customer, Trump Media stocks are not a good investment at this time.
Perhaps the company is the truth+ and truth. If the FI product ultimately produces sales, it would deserve a different look. For now, there is no compelling enough reason to buy Trump’s media stocks.
Robert Izquierdo has no position in any of the stocks mentioned. Motley’s fools have no position in any of the stocks mentioned. Motley Fools have a disclosure policy.
The Motley Fool is a partner at USA Today, providing financial news, analysis and commentary designed to help people control their financial lives. The content is produced independently of USA Today.
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