Trump Media Stock Surges, Outperforming Meta in 2024
Trump Media & Technology Group (DJT) and Meta Platforms (META) represent distinct approaches to investing within the social media sector. Trump Media, operating through its Truth Social platform, caters to a niche audience leaning towards conservative viewpoints. Meta, the parent company of Facebook, Instagram, Messenger, and WhatsApp, remains the dominant player in the social media landscape. Over the past twelve months, Trump Media’s stock has surged by 95%, while Meta’s stock has increased by 73%, both significantly outperforming the S&P 500’s 24% gain. However, should investors purchase either of these high-performing social media stocks currently?
The key divergence between Trump Media and Meta lies in their origins. Trump Media launched Truth Social as a direct response to what it perceived as “big tech companies” suppressing debate and censoring voices, a claim made in 2022. Despite this mission, Truth Social lacks transparency regarding its active users, average revenue per user, and ad impressions. Consequently, direct comparisons with larger social media platforms are difficult. According to SimilarWeb, Truth Social recorded 76,463 daily active users (DAUs) in the U.S. as of May 19, 2024, and approximately 4 million monthly visits between May 2023 and April 2024. Furthermore, Trump Media recently introduced Truth+, its streaming video platform, though the Android app has only been downloaded around 10,000 times as of the present.
Meta’s global influence is immense. Its core apps boast 3.29 billion daily active people (DAP) which grew 5% year over year during its most recent quarter. Meta’s ad impressions increased by 7%, alongside a 11% rise in average ad prices. Meta’s Reality Labs segment, responsible for mixed and virtual reality devices, continues to operate at a significant loss, although its growth offsets these expenses.
Comparing the two companies reveals significant differences in growth and valuation. In 2023, Trump Media generated $4.1 million in revenue while posting a net loss of $58.2 million. During the first nine months of 2024, revenue increased to $2.6 million, yet the net loss widened to $363.2 million. Despite holding $372.1 million in cash and equivalents as of the third quarter, the company’s substantial capital-intensive streaming video business could rapidly deplete this reserve. The lack of near-term forward-looking guidance from Trump Media, coupled with a market capitalization of $6.7 billion, suggests a significant overvaluation – more than 1,600 times last year’s sales. Additionally, the company has substantially increased its share count nearly 60% since its SPAC-backed market debut last March, creating additional dilution pressure with increased stock offerings and subsidized salaries through stock options.
In contrast, Meta’s performance in 2023 saw revenue rise by 16% to $134.9 billion, with net income climbing 69% to $39.1 billion. During the first nine months of 2024, revenue grew 22% to $116.1 billion, and net income increased 66% to $41.5 billion. Meta maintains a substantial cash position of $70.9 billion, augmented by its ability to repurchase 11% of its shares over the past five years. Meta projects 21% revenue and 52% earnings per share (EPS) growth for the full year, along with a stock valuation of 8 times next year’s sales and 24 times forward earnings. Meta’s advertising sales benefited from the stabilization of the macroeconomic environment, increased spending from Chinese gaming and e-commerce companies, and the expansion of its Reels short video platform – a strategic response to the influence of TikTok, as well as overcoming challenges posed by Apple’s privacy-focused iOS updates that temporarily hampered growth in 2022.
The more prudent investment option lies with Meta Platforms. Trump Media’s recent gains were primarily driven by short-term trading activity and the election cycle, rather than improvements in its core business. This dynamic renders the stock a risky investment, potentially plummeting more than 90% despite its elevated valuation. Meta, however, offers a more solid investment outlook, anticipated to continue growing with new user acquisition and ecosystem expansion.
Don’t Miss This Second Chance: Our expert team occasionally issues a “Double Down” stock recommendation for companies poised for significant gains. Consider these past successes: Nvidia (investing $1,000 in 2009 yielded $374,613!), Apple ($1,000 invested in 2008 resulted in $46,088!), and Netflix ($1,000 invested in 2004 grew to $475,143!). We’re currently issuing “Double Down” alerts for three exceptional companies – and this may be a rare opportunity. See 3 “Double Down” stocks »Stock Advisor returns as of January 6, 2025 Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Leo Sun has positions in Apple and Meta Platforms. The Motley Fool has positions in and recommends Apple and Meta Platforms. The Motley Fool has a disclosure policy.
Better Social Media Stock: Trump Media vs. Meta Platforms was originally published by The Motley Fool
