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Is It Too Late to Buy Trump Media & Technology Group Stock?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

The Trump Media & Technology Group Corp.’s stock price saw an increase on Friday, trading up by 4.65 percent. This rise is likely influenced by recent coverage emphasizing a notable expansion plan and emerging strategic partnerships aimed at bolstering digital infrastructure and content delivery. Investors appear optimistic about these developments, reflecting positively in the company’s market performance.

  • Trump Media & Technology Group (DJT) rose by 6.8% in pre-bell hours following a 5.3% increase from the previous session.
  • DJT showed pre-bell gains of 1.2% after a notable 10.5% rise the previous session, joining other Wallstreetbets stocks like INTC, AMD, NVDA, and TSLA.
  • DJT experienced a 3.1% increase in pre-market trading, continuing the momentum from the prior 11.8% surge.

Candlestick Chart

Live Update at 14:38:48 EST: On Friday, September 27, 2024 Trump Media & Technology Group Corp. stock [NASDAQ: DJT] is trending up by 4.65%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Recent Earnings Report and Key Financial Metrics

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The recent performance of Trump Media & Technology Group Corp. has been quite the rollercoaster. On one hand, we have the rapid incline in stock prices, but on the other, the financial statements paint a different picture. The recent earnings did not seem to justify the stock’s bullish movement at first glance. However, stock markets often have their own logic, and DJT’s case is a fascinating study.

The company has reported a bewildering EBIT margin of -22,341.6%, with gross margins standing relatively strong at 88.8%. Such high gross margins typically signify that the core business model remains sound, albeit operational inefficiencies have dragged down overall profitability. The pre-tax profit margin is a dreadful -7,675.7%, a stark reminder of the challenges DJT faces in converting revenue into actual profit. Yet, these aren’t simple numbers; they tell a story of aggressive growth paired with significant growing pains.

In detail, the income statement reveals operating revenue of $836,900, vastly overshadowed by total expenses exceeding $19.4M. The net income stands at a disappointing -$16.37M. Delving deeper into the Balance Sheet, total assets of $356.49M are juxtaposed against total liabilities of $14.83M. These figures suggest DJT is asset-rich but still struggles with its cash flow. Notably, the Cash Flow Statement shows a -$23.58M in free cash flow, another red flag indicating DJT’s liquidity struggles.

Riding through the volatile trading waters, DJT’s quick ratio stands at 24.1, significantly above the industry average, shedding light on its ability to cover short-term obligations effortlessly. The current ratio of 24.7 further accentuates this point, indicating an excess of current assets over current liabilities.

Market Impact and the Recent Price Surge

Now, let’s pivot to how these financial metrics translate into the recent stock price trading patterns. The series of pre-market gains and the substantial post-market surges clearly indicate an overwhelming sentiment of optimism among traders. Various factors contribute to this unrelenting bullish sentiment.

  1. Market Psychology: Often, stock prices thrive on market psychology. The recent gains in DJT stock echo a herd mentality where speculative trades are driving the price higher, despite less impressive financials.
  2. Comparisons with Peers: DJT is not alone in its gains. Other Wallstreetbets stocks like INTC, AMD, NVDA, and TSLA have also demonstrated premarket increases. This camaraderie among high-profile, high-volatility stocks possibly lends credibility to DJT’s price surge.
  3. Speculative Trading: The impressive price rise, even on less favorable fundamentals, can be attributed to speculative trading. Day traders, momentum investors, and hedge funds may be seeing DJT as a lucrative short-term trade rather than a long-term investment.
  4. Technological Optimism: Despite the financial struggles, DJT remains a significant player in the media and technology landscape. Recent news coverage highlighting its ambitious tech ventures fuels the bullish sentiment, overshadowing the immediate financial concerns.

More Breaking News

Insights from Price Data

Examining the multi-day price chart, one can spot the turbulent yet upward trend DJT has exhibited. From a low of $12.15 on Sep 23, 2024, the stock climbed to $14.63 by Sep 27, 2024. The intraday data shows consistent buying pressure, especially notable during the trading spikes at on-the-clock times, indicative of institutional trading activities.

Such patterns highlight an environment dominated by speculative buy-ins, probably driven by algorithmic trading engines that capitalize on minimal dips to maximize short-term gains. Also, the stock’s behavior during those crucial final trading hours indicates robust interest from retail and institutional investors alike.

Financial Ratios and Their Implications

Diving deeper into key financial ratios, the company’s price-to-sales ratio at 1,016.25 prompts a pause for reflection. Staggeringly high, it indicates that the market values each dollar of DJT’s sales much higher than its actual book value would suggest, a classic hallmark of high-expectation speculative stocks. Likewise, the price-to-book ratio at 7.97 unveils significant optimism for future growth, though it skews far from typical valuation standards.

Moreover, the valuation measures denote immense pressure, with a stunning PE high of 13.33 over the last five years juxtaposed against a current PE of negative values, reflecting the operational front’s economic struggles. Nonetheless, the total enterprise value hovers around $2.38 billion, drastically impactful against its tangible book value, perhaps illustrating investor confidence in DJT’s strategic direction despite operational shortcomings.

Elaboration on News Articles

To connect the dots, let’s dissect the recent news articles that justify the recent percentage change in DJT, spotlighting the narratives and the wider implications on the market:

Gains in Pre-bell Hours: The Continuation of Optimism

Pre-market trading saw DJT’s stock rise by 6.8%, following a substantial 5.3% increase in the previous session. This surge exemplifies a short-term trading window where optimistic sentiment snowballs. Investors, buoyed by positive pre-market moves, often pour in, further pushing the stock higher. This cyclic behavior amplifies minute news or speculative trends into significant price hikes.

Riding Public Sentiment Alongside Peers

Similar results in other Wallstreetbets favorites like INTC, AMD, NVDA, and TSLA underline a sector-wide bullish vibe. DJT’s 1.2% pre-market gain, following a dramatic 10.5% rise, hints at synergies among these tech-oriented stocks walloping record highs due to collectivized enthusiasm. Wallstreetbets often generates hype by banding stocks together, proving that DJT might have been swept in this collective excitement.

Hitting Higher Grounds Despite Financial Weaknesses

Even with highlighted distress in financial ratios and earnings reports, DJT’s 3.1% increase in pre-market trading reflects a resurgent investor belief. This can stem from holistic market optimism, technological advancements, speculative trading leverage, or sheer inertia pushing prices up amidst speculative frenzy.

 

Conclusion: Is It Too Late?

The whirlwind of DJT’s recent trading sessions juxtaposed against its not-so-pretty financials offers a classic speculative trading tale. Undoubtedly, for those catching the ride early, the gains are solid. However, aspirant investors or traders must weigh the volatile nature of such stocks. While today’s market universe propels DJT up, any substantive swing in public sentiment or deeper financial scrutiny could alter this bullish narrative.

Remember, DJT’s recent success is a testament to market psychology more than robust financial health. For those eyeing long-term investments, it might be prudent to proceed with caution and circumspect, mitigating risks by analyzing broader market trends, specific sector performance, and DJT’s evolving financial posture closely.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”