Trump Media & Technology Group (DJT 12.37%) and Rumble (RUM -0.52%) operate alternative social media platforms not associated with big tech companies. Trump Media owns Truth Social, an X-like platform that launched in early 2022. Rumble promotes its live video streaming platform as an alternative to YouTube.
Both companies claim to operate politically neutral platforms and do not censor their content, but they are frequently used by conservative content creators. Many of their users believe that Alphabet’s Google, Meta Platforms’ Facebook and Instagram, and other leading technology platforms are biased and intentionally censor right-leaning content more than left-leaning content.
Image source: Getty Images.
Both Trump Media and Rumble went public through mergers with special purpose acquisition companies (SPACs). Trump Media stock opened at $70.90 after it completed its merger last March, but is now trading at around $34. Rumble stock began trading at $12.44 after it completed its merger in September 2022, but now trades at less than $6. Let’s see why these two stocks were halved – and whether one of them is still worth buying now.
Trump Media is still a meme stock
It’s difficult to compare Trump Media’s Truth Social to other social media platforms because it doesn’t reveal 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 to get some rough estimates. SameWeb estimates that Truth Social had only 76,463 active users in mid-May, compared to 124,852 active users at the end of March. TheRighting estimates that the number of unique (but not necessarily active) users has shrunk from 3.26 million in February 2022 to 2.11 million in June of this year.
By comparison, Meta served 3.29 billion daily active people across its suite of apps (Facebook, Instagram, Messenger, and WhatsApp) last quarter. Snap’s Snapchat hosted 443 million daily active users (DAUs) last quarter, while Elon Musk claims X, the platform formerly known as Twitter, has more than 600 million MAUs.
In 2023, Trump Media had revenue of $4.1 million but had a net loss of $58.2 million. In the first half of 2024, it generated revenue of $1.6 million as it posted a staggering net loss of $344 million. However, it did end the second quarter with $344 million in cash and equivalents, but that’s mainly because it raised more money through equity offerings, increasing the number of its outstanding shares by 44% since its public debut.
Analysts haven’t put out any long-term estimates for Trump Media yet, but the stock is ridiculously valued compared to its past sales. With an enterprise value of $5.77 billion, it trades at more than 1,440 times last year’s sales. So, it’s a meme stock that could easily fall more than 90% and still be overvalued.
Rumble’s business model appears more stable
Rumble’s business is easier to analyze because it regularly discloses the number of monthly active users and other traditional growth metrics. But after peaking at 80 million MAU in Q4 2022, it ended Q2 2024 with just 53 million MAU.
Rumble’s average monthly viewing minutes also fell from 11.1 billion at the end of 2022 to 8.5 billion at the end of Q2 2024 – although hours of uploaded videos per day rose from 10,373 to 13,342 over the same period. It mainly blamed this slowdown on the volatile news cycle and the restrictions imposed by Google on creators automatically syncing their content across YouTube and Rumble.
Rumble’s revenue rose 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-on-year to $40.2 million with its net loss increasing from $58.1 million to $70.1 million. That’s not a great situation for a company that ended its most recent 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. This rebound could be driven by the US election, a potential looming ban on TikTok, and potential victories in the two ongoing lawsuits against Google — which accuse the tech giant of promoting YouTube videos across rival video platforms within its search results and taking unfair advantage. Its dominance of the digital advertising market is to stifle its smaller competitors. Its emerging 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 16x sales this year — but it’s also not a wildly overvalued meme stock like Trump Media.
Best Buy: Rumble
I wouldn’t rush into buying any of these stocks today. But if I had to choose one of these controversial stocks over the other, I would buy Rumble because it actually generates meaningful revenues, reports transparent growth metrics, and trades at valuations that can be justified by its long-term growth potential.
Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Susan Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Leo Sun holds positions at Meta Platforms. The Motley Fool has positions in and recommends the Alphabet and Meta platforms. The Motley Fool has a disclosure policy.
