Shares of Trump Media & Technology Group (DJT -2.56%) jumped 5% overnight but fell 8% at the open Friday following the conviction of Donald J. Trump in a New York felony case. Investors are focused on the headlines, but the implications for the business are unclear.
Separating the man from the business
Trump Media is the parent of Truth Social, a social media platform championed by the former president as an alternative to what was then known as Twitter. Trump has remained one of the highest-profile users of the platform, though the former president is not a named executive and is not on the board.
Late Thursday, a Manhattan jury found Trump guilty on 34 counts of falsifying business records related to hush money paid to Stephanie Clifford, a porn star known professionally as Stormy Daniels, during the 2016 presidential campaign. Trump is scheduled to be sentenced on July 11, and it is unclear at this point whether he will receive a prison sentence for the offensives.
It is also unclear what the verdict means for Trump Media. In one sense, the risk of prison time for one of the social network's most prolific users, and a magnet to draw in other users, could hurt the brand. However, it is also possible the renewed focus on Trump will draw new users to the social media site.
Is now the time to buy Trump Media stock?
Separating the emotion from the business, it is hard to get too excited about Trump Media stock. The company has already had to navigate through accounting issues during its short time on the public markets, and its numbers are paltry for a company valued by the market at more than $9 billion.
Trump Media generated just $3.79 million in sales in the last 12 months, posting a negative $110.4 million EBITDA during the period.
For all of Trump's pull, it is going to take a lot more than one person to make this social network a success. Politics aside, investors are best watching this story play out from the sidelines.
