Trump Media stock bounced back this week after the company announced its financial results, which showed strong revenue and profitability growth. DJT jumped to $5, up by over 40% from its lowest point this month. Still, the company faces some major risks as Bitcoin falls and as Democrats prepares to take power.
Trump Media stock jumps after earnings
Trump Media, the parent company of Truth Social, published its third-quarter report, which provided insights about its business. The results showed that the company’s revenue jumped by 205% in the third quarter to $3 million. This revenue was driven by Truth API, the newly launched service that gives users the ability to pay for early access of Trump’s social media posts.
Most notably, the company said that its profit jumped during the quarter. It jumped to $409.7 million in the third quarter, much higher than the losses it generated in the same period last year.
However, the reality is that these growth catalysts face some major risks ahead. First, Democrats won the midterm elections by a large margin. They are on track to win 56 seats in the Senate and more than 250 in the House of Representatives. Since corruption was one of the biggest issues in this election, Democrats will likely probe Trump Media for the Truth API solution.
Critics argue that the company is engaging in illegalities by allowing Trump to benefit from his social media posts. In other words, he is allowing rich high-frequency trading companies to have market-moving information before the rest of the market.
The other crucial risk that Trump Media faces is the ongoing Bitcoin price weakness. Bitcoin plunged to $67,700, down by over 22% from its highest point in September this year. It has moved to its lowest level since August 20th this year.
The ongoing Bitcoin weakness is important for Trump Media because it is one of the biggest holders. It holds 15,649 coins, making it the 9th-largest Bitcoin holder in the world. Its Bitcoin holdings explain why its profit jumped in the third quarter as the coin jumped from $57,700 to $126,300 in October.
Further, the decision to merge with TAE Technologies faces risks since the company is not yet profitable. It was established in 1998 and has spent this period researching on its technology. While it has made substantial progress in this period, it is still unclear whether it will become a profitable company in the long term.
Meanwhile, data compiled by SimilarWeb shows that Truth Social is not a popular social media platform. Its website visitors dropped by 22% in October from September. It has dropped by over 50% from a year earlier, a trend that has accelerated as Trump’s approval rating plunged. This trend will continue after the last midterm election in which the Republican party lost big.
DJT stock price technical analysis
The daily chart shows that the Trump Media stock has been in a strong freefall this year and is now hovering near its all-time low. It has remained below the important support level of $6.85, its lowest level on June 26.
The stock has remained below the 50-day and 100-day moving averages and the Supertrend indicators. Also, there is a risk that the ongoing rebound is a dead-cat bounce, a temporary rebound that is often followed by a retreat.
Therefore, the stock will likely resume the downward trend, and retest the support level of $3.7, its lowest level this week. A move below that level will point to more downside, potentially to the psychological level of $3.0.