Is Trump’s social-media company worth buying?

Former President Donald Trump’s new social-media venture has become popular among individual investors. The platform is owned by the newly-formed Trump Media & Technology Group (TMTG), a social media and technology focused company. The shares have traded around $90 in recent days, preserving a 900% rally since the deal was announced in October and up more than 80% this year.

How much is Trump's social media worth?

Based on Digital World's closing price on March 4, Trump's media company has an implied market valuation of $3.63 billion, according to Google Finance. They have achieved a staggering market valuation even though the Trump media venture has no known revenue, a CEO with no business or tech experience and federal regulators are the deal. Some analysts say Mr. Trump’s new company is overvalued even as its main product has launched. But they still have a lot to prove and faces a crowded social-media landscape.

How does this compare with the market capitalizations of some of the companies TMTG seeks to compete with? Meta Platforms is currently valued at around $545 billion. Snap Inc. are trading at a rather low market capitalization compared to Meta, but still around $54 billion. And Twitter’s market cap is around $27 billion.

Is Trump’s social-media company worth buying?

This depends a lot on what you believe TMTG's future potential does look like. In the social media space, TMTG could have more success in competing with its established peers. Meta does have huge resources as well, but other players, including Twitter and Snap, are not as large and profitable as Meta. But its commercial success is far from guaranteed, of course. Initial demand was strong but it is possible that some or possibly even many of those will not stay with the platform forever. Other active users are frustrated with the lack of a desktop app and without new users, it is the same recycled content seen each day. With waning interest already rearing its head, it’s difficult to imagine a long-term viable path to success for Truth Social.

I personally believe that Trump’s social-media is a relatively risky investment now. Success with users is not certain, and there are huge questions when it comes to whether TMTG will be able to operate profitably in the foreseeable future.