Trump Media & Technology Group (TMTG, Financial) has seen its stock price plummet 70% since it went public. Despite this sharp decline, the company's market value remains around $3 billion, a figure many analysts believe is still too high.
Jay Woods, Chief Global Strategist at Freedom Capital Markets, stated that TMTG's current valuation is "unreasonable." According to data, the company's last-quarter sales were $837,000, while net losses were a staggering $16.4 million. Woods further noted that the company's price-to-sales ratio is an eye-popping 1864x, with revenue less than $2 million over the past 12 months.
Woods also highlighted the limited growth prospects for TMTG's social media platform, Truth Social. User retention and growth have been challenging, especially if Trump loses in future elections. Another issue dragging down Truth Social's stock is Trump's increasing activity on its main competitor, X (formerly Twitter), indicating a lack of focus on his own platform.
Adding to these challenges, insiders recently sold off their TMTG shares as the lock-up period ended, which could further pressure the stock. Union Atlantic Ventures, one of TMTG’s largest shareholders, nearly liquidated its holdings post the lock-up period.
Although Trump previously stated he wouldn't sell his shares post lock-up, there's no guarantee he won't change his mind. Currently, Trump holds 57% of the company's equity. Woods warned that if Trump, the largest shareholder, were to sell a significant portion of his shares, it could trigger panic among other insider shareholders, leading to a substantial drop in the stock price.
