Shares of Trump Media & Technology Group (DJT) have been volatile since its merger with special purpose acquisition company (SPAC) Digital World Acquisition in late March, and are rising again following Thursday night’s presidential debate between President Joe Biden and former President Donald Trump.
In fact, DJT shares have fallen nearly 38% since March 26th, but were up more than 37% in the five days leading up to the debate. Today, shares rose 17% in premarket trading but gave up those gains at the open. DJT shares were last trading down about 2%.
Should you buy, sell, or hold DJT stock?
Given this volatility, many market participants may be wondering whether DJT stock is even worth buying, but the reality is that it remains a risky proposition for investors.
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One warning sign is that there is currently no analyst coverage of Trump Media & Technology shares, at least as far as S&P Global Market Intelligence is concerned. Analysts typically have access to research and information that isn’t readily available to individual investors, so their insight can help you determine the best and worst stocks to buy.
That being said, Steve Sosnick, chief strategist at Interactive Brokers, offered some views on DJT stock a few months ago.
Sosnick wrote in a March 26 note that he believes “the stock is politically motivated” and that “the company’s most committed investors viewed this as a call option on the MAGA movement.”
The underlying fundamentals of DJT stock also make it a speculative investment for market participants. For example, the company reported first-quarter earnings in late May, showing revenues of $770,500, down from $1.1 million in the same period last year. Trump Media & Technology Group also posted a net loss of $327.6 million, down from a loss of $210,300 in the same period last year.
The wider net loss included $311 million in non-cash charges from the conversion of promissory notes and other transactions related to its merger with Digital World Acquisition.
But Sosnick says, “When investment decisions are based primarily on emotion, it’s no wonder that standard valuation metrics are ignored. True believers don’t care much about mundane concerns like price-to-earnings ratios. They don’t do detailed calculations about the discounted future cash flows of their favorite stocks.”
DJT is hardly a penny stock, and Trump Media & Technology Group has a market capitalization of over $6 billion. Nevertheless, DJT stock is a highly risky and speculative trade for market participants, and if you do trade, do so in small amounts that you can afford to lose.
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