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Introduction

Less than a year into Donald Trump’s second term, the optimism that once surrounded Trump Media & Technology Group (DJT) has sharply faded as it struggles to turn political visibility into financial stability. This article highlights its current financial situation and what to expect going forward.

Why The Trump Media Stock Price Has Crashed

Below are 10 reasons why the DJT stock price has crashed this year, namely:

1. Truth Social, its core product, is not gaining market share in the social media industry, remaining heavily reliant on Trump’s own activity and the platform’s ability to maintain relevance among his political base. While its total visits rose by 32% in September, the total visits stood at just 20.8 million which is a small amount for a company valued at $3.5 billion;
2. Truth Social is not making any money, even with Donald Trump being in the White House with analysts and investors expressing concerns about the company’s limited disclosure practices. Unlike most major social media firms, Trump Media does not regularly report user metrics such as daily or monthly active users, making it difficult to gauge audience growth or engagement trends.
3.  DJT net sales in Q3 stood at just $972.9 thousand, down from $1.07 million in the same period last year reflecting stagnating growth in its core social media operations;
4. DJT posted a net loss of $54.8 million in Q3, more than double the $19.2 million loss recorded a year earlier, and this performance will likely continue as the company’s business continues to struggle amid rising competition from the likes of X and Mastodon;
5. DJT stock price has also plunged because of the ongoing performance of Bitcoin treasury companies (Strategy Inc. (MSTR) is down 51% and Metaplanet Inc. (MTPLF) is down 71%) and this is notable because the company holds 15,000 Bitcoins currently valued at over $1.3 billion and, while these holdings give Trump Media exposure to the cryptocurrency sector, the recent downturn in crypto markets could weigh on its future earnings;
6. The company faced a sharp rise in costs, including $20.3 million in legal expenses during Q3;
7. It is unclear whether its TV initiatives will succeed as the streaming sector is highly competitive; 
8. The sustained losses and limited revenue growth of DJT have dampened initial enthusiasm among retail investors with the stock price often moving sharply on political developments or social media sentiment rather than fundamental performance; 
9. despite attempts to pivot into new ventures, Trump Media’s financial position remains challenging having to face the dual task of managing high costs while trying to convert its political visibility into sustainable revenue (Source) and
10.  DJT has authorized over 36 million warrants, which could significantly dilute existing equity if exercised as it would flood the market with new shares, depressing the stock price and warrant value.

On the positive side, the company has a strong balance sheet with a large hoard of Bitcoin and over $673 million in cash and short-term investments. Source

Technical Analysis and Price Projection

DJT stock remains below the 50-week moving average, while the Average Directional Index has plunged to the lowest level in months which is a sign that the stock lacks the momentum. For now, DJTs future hinges on its ability to expand monetization, control expenses, and navigate the unpredictable intersection of politics, social media, and cryptocurrency. Therefore, according to Invezz (see here), the most likely scenario is where it continues falling as its fundamentals weaken. However, the main risk for shorting the stock is that it is highly shorted and may go through a short-squeeze.

The Trump Media & Technology Group Warrant (DJTWW)

As outlined in Intro To Stock Warrants the steps for successful warrant investing include 

1. Identifying a company that offers a long-term warrant with at least a 36 months expiration date (DJTWW expires in 40 months) because the longer the remaining life of a warrant the more time there is for the company to execute on their business plan and, in the event of a market downturn, more time for a favorable turnaround.
2. Selecting a company that you think has great potential (the 10 reasons above suggest that that is NOT the case) because if the company does not perform and execute on its business plan the common shares will not rise and, therefore, their associated warrants will nor rise either and, if the common shares decline, their associated warrants will decline by an even greater percentage. 
3. Identifying a warrant currently priced to deliver an enhanced return of at least 1.5-to-1 (i.e. a 50% greater return than the associated stock) and the current leverage of DJTWW is 2.1-to-1. Go here for an example of how to calculate the Return on Investment (ROI) of a warrant as compared to the associated stock).
4. Choosing a warrant that has a high strike price as this makes the warrant more likely to expire “in the money” and have intrinsic value.
5. Choosing a warrant with a high conversion ratio because you want the warrant to convert into as much stock as possible. 

The DJTWW meets 4 of the 5 criteria for success but the most important, that the stock has great potential, is not being met. Currently DJT has no formal consensus 1-year analyst price target as its retail-driven momentum and political exposure make it difficult to model using traditional valuation frameworks. Only one analyst has issued a rating, and it is a “Sell.”

Suggested Action

The DJTWW has a strike, or exercise, price of $11.50 (i.e., the stock must rise to a minimum of $11.50 by March 25th, 2029, before the warrant can be  converted into the stock by Canadians). Currently, (November 13th) the stock has surpassed $11.50 so if you are Canadian and own any warrants, now might be a good time to consider converting the warrants into the associated stock and, if you did so, you would realize an additional 109% in your investment. If you are American, the SEC does not allow you to convert your warrants into the associated stock and, given the 10 reasons stated above as to why the DJT stock price has crashed this year and likely will continue falling as its fundamentals weaken, it warrants considering selling the warrant. In either case it is paramount to do your own due diligence.

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