Trump Media & Technology Group(NASDAQ: DJT), the parent company of Truth Social, has taken investors on a wild ride since it went public by merging with a special purpose acquisition company (SPAC) on March 26, 2024. Its stock opened at $70.90, sank to an all-time low of $12.15 on Sept. 23, and now trades at about $33.
In 2023, Trump Media generated just $4.1 million in revenue while racking up a net loss of $58.2 million. In the first nine months of 2024, it only generated $2.6 million in revenue as its net loss widened to a whopping $363 million. With an enterprise value of $5.44 billion, its stock trades at 1,322 times last year's revenue -- so it's a meme stock that is mainly being propped up by the news cycle as it relates to President-elect Donald Trump instead of operating a sustainable business model.
Image source: Getty Images.
Unlike other social media companies, Trump Media doesn't disclose its number of active users, ad impressions, or average revenue per user. So there are very few financial metrics available to analyze the health of the business. It's getting ready to launch its own streaming video platform, but that's a notoriously expensive market to break into.
So instead of chasing Trump Media's wild short-term swings and hoping it somehow scales up its business, investors with a long-term mindset should simply buy two more reliable social media stocks instead: Meta Platforms(NASDAQ: META) and Pinterest(NYSE: PINS).
The social media leader: Meta Platforms
Meta is the world's largest social media company. It served 3.29 billion daily active people across its entire family of apps (Facebook, Instagram, Messenger, and WhatsApp) in its latest quarter. That represented 5% user growth from a year earlier. In 2023, Meta's revenue and earnings per share (EPS) grew 16% and 73%, respectively. In 2024, analysts expect its revenue to rise 21% and 52%, respectively.
That acceleration was mainly driven by a warmer macroeconomic environment, the expansion of its Reels short video platform, and more ad spending from Chinese e-commerce and gaming companies. The robust growth of its high-margin advertising business, which accounted for 98% of its revenue last year, offset the persistent losses at its Reality Labs division which produces its virtual reality (VR) and augmented reality (AR) products.
Meta has been ramping up its near-term spending on its cloud infrastructure, artificial intelligence (AI), and Reality Labs segments, but it still generated enough cash to buy back $30.1 billion in shares and pay out $3.8 billion in dividends in the first nine months of 2024.
Analysts expect Meta's revenue and earnings to grow another 15% and 12%, respectively, in 2025. Its stock still looks reasonably valued at 22 times forward earnings -- and it could still have plenty of room to grow as it locks in more users, rolls out new features, and attracts more advertisers.
The resilient niche challenger: Pinterest
Pinterest carved out a niche in the social media market with its virtual pinboards for sharing ideas, interests, and hobbies. It experienced a major growth spurt during the pandemic as more people stayed at home and looked for online shopping ideas, recipes, DIY projects, and family oriented activities on its pinboards. However, its growth cooled off as the pandemic lockdown period passed and more people went outside again.
Yet Pinterest is still growing. In 2023, its revenue rose 9%, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 55%, and its total number of monthly active users (MAUs) grew 11% to 498 million. By the third quarter of 2024, its MAUs had swelled to 537 million -- which should silence the bears who had written it off as a pandemic-era fad stock that would run out of steam.
For the full year, analysts expect its revenue and adjusted EBITDA to grow 19% and 43%, respectively. For 2025, they expect its revenue and adjusted EBITDA to rise 16% and 25%, respectively. It's also expected to turn profitable on a generally accepted accounting principles (GAAP) basis this year.
Most of that growth should be driven by its growing popularity among Gen Z users (who now account for over 40% of its users), the integration of more short videos, new AI-driven recommendation tools, more e-commerce tools for its "shoppable" pins, and its international expansion. At 13 times next year's adjusted EBITDA, Pinterest's stock still looks dirt cheap relative to its growth potential.
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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 Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms and Pinterest. The Motley Fool has a disclosure policy.
