Trump Media & Technology Group(NASDAQ: DJT) and Rumble(NASDAQ: RUM) operate alternative social media platforms that aren't tethered to big tech companies. Trump Media owns Truth Social, an X-like platform that was launched in early 2022. Rumble promotes its streaming video platform as an alternative to YouTube.
Both companies claim to operate politically neutral platforms that don't censor their content, but they're more frequently used by conservative content creators. Many of their users believe Alphabet's Google, Meta Platforms' Facebook and Instagram, and other leading tech platforms are biased and intentionally censor more right-leaning content than left-leaning content.
Image source: Getty Images.
Trump Media and Rumble both went public by merging with special purpose acquisition companies (SPACs). Trump Media's stock opened at $70.90 after it closed its merger this March, but it now trades at about $34. Rumble's stock started trading at $12.44 after it closed its merger in September 2022, but it now trades at less than $6. Let's see why these two stocks were cut in half -- and if either one is still worth buying right now.
Trump Media is still a meme stock
Trump Media's Truth Social is difficult to compare to other social media platforms because it doesn't disclose any traditional growth metrics like monthly active users (MAUs), average revenue per user (ARPU), or ad impressions.
Instead, investors need to rely on third-party data for some rough estimates. SimilarWeb estimates that Truth Social only 76,463 active users in mid-May, compared to 124,852 active users at the end of March. TheRighting estimates its number of unique (but not necessarily active) users shrank from 3.26 million back in February 2022 to 2.11 million this June.
By comparison, Meta served 3.29 billion daily active people across its family of apps (Facebook, Instagram, Messenger, and WhatsApp) in its latest quarter. Snap's Snapchat hosted 443 million daily active users (DAUs) in its latest quarter, while Elon Musk claims X, the platform formerly known as Twitter, has over 600 million MAUs.
In 2023, Trump Media generated $4.1 million in revenue but racked up a net loss of $58.2 million. In the first half of 2024, it generated $1.6 million in revenue as it racked up a staggering net loss of $344 million. It still ended the second quarter with $344 million with cash and equivalents, but that's mainly because it raised more cash with stock offerings, which increased its outstanding share count by 44% since its public debut.
Analysts haven't set any long-term estimates for Trump Media yet, but the stock is absurdly valued relative to its past sales. With an enterprise value of $5.77 billion, it trades at over 1,440 times last year's sales. Therefore, it's a meme stock that could easily plummet more than 90% and still be overvalued.
Rumble's business model looks more stable
Rumble's business is easier to analyze because it regularly discloses its MAUs and other traditional growth metrics. But after peaking at 80 million MAUs in the fourth quarter of 2022, it ended the second quarter of 2024 with just 53 million MAUs.
Rumble's average minutes watched per month also declined from 11.1 billion at the end of 2022 to 8.5 billion at the end of the second quarter of 2024 -- even though its hours of daily uploaded videos rose from 10,373 to 13,342 during the same period. It mainly blamed that slowdown on the volatile news cycle and Google's restrictions on content creators automatically synchronizing their content across YouTube and Rumble.
Rumble's revenue surged 106% to $81 million in 2023, but its net loss widened from $11.4 million to $116.4 million. In the first half of 2024, its revenue fell 6% year over year to $40.2 million as its net loss widened from $58.1 million to $70.1 million. That's not a great situation for a company that ended its latest quarter with $152 million in cash, cash equivalents, and marketable securities.
But for the full year, analysts expect Rumble's revenue to rise 29% to $104.7 million as it narrows its net loss to $114.6 million. That recovery could be driven by the U.S. elections, the potential looming ban on TikTok, and potential victories in its two ongoing lawsuits against Google -- which accuse the tech giant of promoting YouTube's videos over competing video platforms within its own search results and unfairly leveraging its dominance of the digital advertising market to stifle its smaller competitors. Its nascent cloud platform, which hosts Truth Social on its servers, could also gain more customers. With an enterprise value of $1.6 billion, Rumble doesn't look cheap at 16 times this year's sales -- but it also isn't a grossly overvalued meme stock like Trump Media.
The better buy: Rumble
I wouldn't rush to buy either of these stocks today. But if I had to pick one of these divisive stocks over the other, I'd buy Rumble because it's actually generating meaningful revenue, reporting transparent growth metrics, and trading at valuations that could be justified by its long-term 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. Suzanne Frey, an executive at Alphabet, 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 Alphabet and Meta Platforms. The Motley Fool has a disclosure policy.
