Trump Media and Technology Group (NASDAQ:DJT) the stock could become an attractive buy following Donald Trump’s election victory last week. As the former president returns to the Oval Office next year, there could be a lot more excitement surrounding the actions of Trump Media and all things Trump brand.

If there were also more traffic to Trump Media’s social media platform, Truth Social, and its recently launched Truth+ streaming service, investors could see an improvement in the company’s bottom line. Is the stage set for this volatile stock to return to the heights it reached earlier this year?

Trading volumes in Trump Media increased

Earlier this year, Trump Media’s stock value rose as hopes seemed to rise that Trump could win the election, and it fell when that enthusiasm seemed to wane. Now that he’s won, a wave of optimism could kick in, leading to a more extended rally. Interest appears to be growing, as trading volume in Trump Media shares has increased significantly in recent days.

TDI Volume data by Y charts.

The big question is whether the actions on social networks will trade like a cryptocurrency and become an indicator of Trump’s overall popularity (and perhaps his approval as president), or whether his valuation will ultimately depend on the strength and success of the company underlying. If it’s the former, it’s possible the stock could reach its high of $79.38, but if it’s the latter, that might be a less likely scenario.

Trump Media remains a risky investment

On Election Day, Trump Media released its latest quarterly results. The company, which owns Truth Social, reported net revenue of just over $1 million for the period ending September 30, a 6% year-over-year decline . This is not what you would expect for a growing company.

Its operating loss rose to $23.7 million, compared to just $3 million in the same period last year. The company’s general and administrative expenses increased from $1.5 million in the year-ago period to $17.7 million this quarter, as Trump Media saw an increase in legal, software , accountants and financiers.

The timing of these disappointing results may have been opportune, as the Trump Media results were not the biggest Trump-related news of the day. But it’s nonetheless important to consider these numbers, as they highlight the risk associated with investing in the business. If Trump Media’s spending increases significantly and it is unable to generate significant growth, it might be difficult to see the stock increasing in value, based on its fundamentals, or to be optimistic regarding its future growth prospects.

Should you buy Trump Media stock?

Trump Media may seem like a stock that stands to benefit from Trump’s election victory, but it’s by no means a sure thing. In the days following the election, the stock’s value fell by a few dollars per share.

It may be difficult to predict how it will perform from here. This year, trading is more akin to cryptocurrency and speculative buying than a typical stock. It is difficult to justify the stock market capitalization of $6.6 billion based on its financial performance and growth prospects.

Trump Media stock could return to its all-time highs, but if it does, it probably won’t be because the company generated good results – it will be due to speculation. This is why I would not suggest buying the stock, as it is a very risky investment with an uncertain future.

Should you invest $1,000 in Trump Media & Technology Group right now?

Before buying Trump Media & Technology Group stock, consider this:

THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Trump Media & Technology Group was not one of them. The 10 stocks selected could produce monster returns in the years to come.

Consider when Nvidia made this list on April 15, 2005…if you had invested $1,000 at the time of our recommendation, you would have $890,169!*

Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor the service has more than quadrupled the return of the S&P 500 since 2002*.

See the 10 values ​​»

*Stock Advisor returns November 11, 2024

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Motley Fool has a disclosure policy.