Wallstreetcn
2024.04.01 17:35
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Trump's most pure concept stock fell by about 27%, with a net loss of USD 58 million last year, and is expected to continue to lose in the future!

Analysts believe that DJT stock under the Trump umbrella is disconnected from its fundamentals, with a meager revenue of $4.1 million, making its valuation overly expensive. Despite having a similar market capitalization, its annual income pales in comparison to its peer Reddit

The announcement of a loss of 58 million US dollars directly caused DJT's market value to evaporate by over 27% overnight.

On Monday, April 2nd, the social media company DJT owned by former US President Trump announced that in 2023, DJT's revenue increased from 1.47 million US dollars in 2022 to 4.1 million US dollars, but the company's net loss in 2023 reached a high of 58 million US dollars, with an expected continued loss in the future.

In comparison, DJT recorded a net profit of 50.5 million US dollars in 2022 due to changes in the value of convertible bonds. After the news was announced, DJT's stock price plummeted by over 27% to $44.95 per share at one point, with a market value falling below 7 billion US dollars.

Looking back at DJT's first week after going public, its stock price experienced an astonishing roller-coaster ride. On the first day of listing on March 26th, DJT's stock price surged 35% during trading hours and closed up over 16%. The stock price continued to soar, becoming the most discussed stock on the "American version of Tieba" Reddit's popular stock trading forum WallStreetBets. However, the good times didn't last long, as DJT's stock price plunged by over 27% during trading hours on Monday after the news was announced.

Some investment experts believe that the company's valuation is somewhat "absurd". The stark contrast between DJT's meager revenue and its market value of billions of dollars has raised doubts among investors and analysts about the company's actual value and future growth potential.

DJT's Stock Price Disconnected from Fundamentals

Firstly, some analysis points out that DJT's stock price is disconnected from its fundamentals. Typically, a company's stock performance is closely related to its fundamental performance. However, some analysis indicates that DJT's stock price has tripled this year, disconnected from its fundamentals, as DJT's stock has become a popular target for investors betting on Trump's potential re-election as US president.

The significant increase in the company's valuation has made shorting it very expensive. According to brokerage data, short sellers face annual financing costs of up to 500%. Data from financial analysis firm S3 Partners shows that with interest on shorting exceeding 100 million US dollars, DJT has become the most expensive short target in the US.

Secondly, some analysis points out that DJT lags significantly behind other companies in the industry in terms of revenue and active user numbers. Reddit Inc., which went public last month and has a valuation similar to DJT, had 267.5 million weekly active users in the last quarter and generated 804 million US dollars in revenue last year. Snap Inc., with a market value of 19 billion US dollars, had sales of 4.6 billion US dollars last year, despite a net loss of 1.3 billion US dollars, with approximately 420 million daily active users in the first quarter Although DJT has about 9 million registered users, it has not disclosed active user data. In its prospectus, DJT explained that the company's operating philosophy differs from traditional social media companies. DJT does not focus on metrics such as active users or per user revenue, believing that excessive attention to these metrics may distract the company from strategically evaluating its business development.

According to media reports, when regulatory agencies inquired about DJT's registration and user numbers, Trump Media protested and ultimately only disclosed data on registered users. The company believes that this approach can better reflect the company's growth and progress.

Furthermore, Trump is facing legal troubles in four criminal cases. The first case went to trial on April 15, involving allegations of falsifying records to conceal hush money payments to a pornographic film actress before the 2016 election. In addition, the New York State Attorney General's Office has accused him of inflating assets and requiring a $175 million bond, which Trump is appealing. These legal issues are testing his response strategy and may have a significant impact on his political career