Now that President Donald Trump is back in the Oval Office, it's a good time to evaluate whether it makes sense to invest in his company, Trump Media & Technology Group (NASDAQ: DJT). He is the majority owner of Trump Media, which is one factor giving him an outsized influence on the company's success.
His victory in the U.S. presidential election contributed to Trump Media shares climbing 36% over the last 12 months. But while Trump's impact on his company's share price proved beneficial so far, this doesn't mean the stock is a good long-term investment.
Understanding if the company's stock is a buy requires taking a closer look at Trump Media, especially since shares are currently well above the 52-week low of $11.75 reached last September when the winner of the presidential election was far from certain.
Trump Media's business dependencies
Understanding Trump Media's business is the first step to evaluating its investment worthiness. The company is impacted by a handful of key dependencies. One of these, as the company notes, is that its "success depends in part on the popularity of its brand and the reputation and popularity of President Donald J. Trump."
In addition, Trump Media's revenue relies entirely on digital advertising generated on Truth Social, its social media platform. This advertising revenue, in turn, depends on Truth Social's ability to maintain and grow its audience.
The company is trying to expand beyond its Truth Social dependency. It released a streaming service in the third quarter of last year. This can serve as another source of advertising revenue over time if it can pull in enough viewers to attract advertisers.
CEO Devin Nunes noted other strategies for increasing revenue, saying the company is exploring "additional possibilities for growth such as potential mergers and acquisitions with companies that would benefit from Trump Media technology and branding, including in the realm of fintech."
What is this mysterious fintech solution? Trump Media is rumored to be developing a cryptocurrency payment processing service called TruthFi, based on a trademark filing it made in November.
How Trump Media's business is doing
For now, Trump Media relies on expanding Truth Social's audience to attract advertisers and grow revenue. But whether it's been successful in doing so is unknown.
The company last shared that Truth Social had 9 million sign-ups in February of 2024. However, the company has not released further data around user growth or other operational business metrics because its "management team believes that such metrics are not critical in the near future for the business and operation of the platform," according to the company.