Why Trump Matchmaker Stocks Are Sharply Higher This Week

Standard & Poor's Global Market Intelligence(S&P Global Market Intelligence )The data show thatTrump Media and Technology Groups((NASDAQ: DJT)Shares of the former Artech, which owns the Truth social media application, surged 67.71 TP3T this week, and the company, which is part of the former Artech, eventually merged with a Special Purpose Acquisition Corporation (SPAC) to enter the public markets. Investors have been trading the stock like crazy, and there's no sign of slowing down.

Here's why Trump Media Group's stock is soaring this week.

A market capitalization of US$10 billion despite meager revenues.

This week, the Trump Media Group finally hit the open market with Digital World Acquisition Corporation (SPAC). The company, which raised about $300 million, has a stated goal of countering large tech audits. Despite the price volatility, the Trump Media Group's market capitalization is currently just under $10 billion - $8.39 billion to be exact, as of this writing.

But what kind of business are you buying at such a high market capitalization? Honestly, it's not that big of a business. for the first nine months of 2023 (financials for the fourth quarter have not yet been released), Trump Media Group reported revenues of just $3.4 million and an operating loss of $10.4 million. Assuming full-year revenue of about $5 million, the stock would have a trailing price-to-sales ratio (P/S) of over 1,000.

A market share of 1,000 is unheard of. As a result, the competitor social media companyMeta PlatformsIts market share has never exceeded 20, yet it is one of the most profitable companies in the world.Standard & Poor's 500The average P/E ratio of the index is slightly below 3. It is no exaggeration to say that the Trump Media Group's valuation is at a premium as a result.

Don't get caught up in the hype

Trump Media Group's stock is soaring, and a lot of people want to get in on the hype. You should not allow yourself to succumb to these temptations. This is a company with meager revenues that is losing money and would need to grow 100 times its current revenues to even reach its current market capitalization.

In the short term, it could rise even faster. But over the long term, the stock may underperform Big Pan because of its extremely low intrinsic value. Smart investors will avoid buying shares of Trump Media Group and put their savings into stable blue-chip stocks.

Should You Invest $1,000 in Trump Media & Tech Group Now?

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Brett Schafer does not own any of the shares listed above.The Motley Fool does not own any of the shares listed above.The Motley Fool has a disclosure policy.

Why Trump's Media Stocks Are Sharply Higher This Week