As Rumble, Trump Media (DJT) stocks surge, brace for a pullback
Rumble (RUM) & Trump Media & Technology (DJT) Stocks Surge Amid Election Developments
This week, Rumble (RUM) & Trump Media & Technology (DJT) stocks soared due to election-related events.
Key Developments:
Rumble's Surge & VP Pick: Rumble's stock jumped over 20% after Donald Trump was shot & announced JD Vance as his vice-presidential pick. Vance & Peter Thiel, both investors in Rumble, are significant figures in this development.
Election Odds & Market Reactions: Investor optimism increased following an assassination attempt on Trump in Pennsylvania & his strong debate performance against Joe Biden. Betting markets now favor Trump's chances if he faces Biden. However, if Biden withdraws, potential Democratic candidates like Kamala Harris, Gretchen Whitmer, and Gavin Newsom could emerge. This speculation has driven interest in DJT & RUM stocks.
Truth Social Engagement: A potential Trump victory could boost engagement on Truth Social, a competitor to platforms like X & d Gab.
Risks Facing RUM & DJT Stocks:
Advertising Challenges: Both companies rely heavily on advertising but struggle to attract mainstream advertisers like Amazon, AT&T, and Walmart, raising concerns about revenue sustainability.
Cash Burn & Future Dilution: Rumble & Trump Media are burning cash rapidly. Rumble reported a Q1 net loss of $43.3 million with $183 million in cash, while Trump Media lost over $327 million, ending with $233 million. Both companies may need to raise significant capital soon.
Rumble faces competitive & valuation challenges against YouTube, with 95.6 billion visits in Q2 versus Rumble’s 351.8 million. Trump Media competes with platforms like X & Reddit, with DJT's $7.7 billion market cap against Reddit’s $10 billion & X’s $19 billion.
Conclusion: Despite recent gains, RUM & DJT stocks face substantial risks & challenges, particularly in attracting advertisers, managing cash flow, and competing in the crowded social media sector.
Source - invezz.com