Consider Ditching Trump-Related Media and Invest in These 2 Tech Companies Instead?
Trump Tech Group (DJT with a 1.08% stake), the organization behind Truth Social, has given investors a rollercoaster ride since its public debut through a merger with a Special Purpose Acquisition Company (SPAC) on March 26, 2024. Its stock started at $70.90, plummeted to an all-time low of $12.15 on Sept. 23, and now trades around $33.
In 2023, Trump Tech generated a mere $4.1 million in revenue while racking up a colossal net loss of $58.2 million. During the first nine months of 2024, its revenue only increased to $2.6 million as its net loss skyrocketed to an astonishing $363 million. With an enterprise value of $5.44 billion, its stock trades at an eye-popping 1,322 times its previous year's revenue. This makes it a pop culture stock primarily supported by media hype due to its association with President-elect Donald Trump, rather than showing signs of a sustainable business model.
Unlike other social media companies, Trump Tech does not disclose its number of active users, ad impressions, or average revenue per user. Thus, financial analysis of the company's health is quite limited. It is planning to launch its own streaming video platform, but breaking into this notoriously expensive market is no small feat.
Instead of chasing Trump Tech's dramatic short-term fluctuations with hopes of scaling its business, investors with a long-term perspective should consider purchasing two more reliable social media stocks: Facebook Inc. (META -1.65%) and Pinterest Inc. (PINS -0.62%).
The Global Social Media Champion: Facebook Inc.
Facebook is the world's leading social media giant, boasting 3.29 billion daily active users across its entire suite of apps (Facebook, Instagram, Messenger, and WhatsApp) in the last reported quarter. This represented a 5% increase in user base compared to the previous year. In 2023, Facebook's revenue and earnings per share (EPS) climbed 16% and 73%, respectively. Analysts forecast a 21% revenue growth and 52% EPS growth for 2024.
This growth surge was mainly fueled by a more favorable macroeconomic climate, the expansion of its Reels short video feature, and increased ad spending from Chinese e-commerce and gaming companies. A healthy revenue growth from its high-margin advertising segment, which accounted for 98% of its income in 2023, balanced out ongoing losses from its Reality Labs division, which focuses on VR and AR products.
Facebook continues to invest in its cloud infrastructure, AI, and Reality Labs divisions, leading to an increase in spending. Despite this, it has managed to repurchase $30.1 billion in shares and distribute $3.8 billion in dividends during the first nine months of 2024.
Analysts believe that Facebook's revenue and EPS will grow another 15% and 12%, respectively, in 2025. Its stock, currently trading at 22 times forward earnings, still appears reasonably priced and could potentially continue expanding as it gains more users, introduces new features, and attracts more advertisers.
The Gritty Niche Challenger: Pinterest Inc.
Pinterest carved out a niche in the social media market by offering virtual pinboards for sharing ideas, interests, and hobbies. The platform experienced a significant growth spurt during the pandemic as people spent more time at home, searching for online shopping ideas, recipes, DIY projects, and family-oriented activities on its pinboards. However, its growth slowed as pandemic lockdowns ended and people ventured outside more.
Yet, Pinterest's growth has continued. In 2023, its revenue jumped 9% and its adjusted EBITDA soared 55%. Its monthly active users (MAUs) increased 11% to 498 million during the same period. By Q3 of 2024, its MAUs had increased to 537 million, dispelling doubts from critics who dismissed it as a pandemic-driven stock doomed to fade away.
Analysts estimate a 19% revenue growth and 43% adjusted EBITDA growth for full-year 2024. In 2025, they expect a 16% revenue and 25% adjusted EBITDA growth. The company is on track to turn profitable according to GAAP standards by the end of 2024.
The majority of this growth can be attributed to its increased popularity among Gen Z users (now representing over 40% of its user base), the integration of more short videos, AI-driven recommendation tools, more e-commerce tools for shoppable pins, and international expansion. At 13 times its 2025 adjusted EBITDA, Pinterest's stock still looks quite affordable considering its growth potential.
Despite the volatile performance of Trump Tech Group, it's crucial for investors to consider the long-term prospects of reliable social media stocks like Facebook Inc. (META) and Pinterest Inc. (PINS). While Trump Tech's stock experiences dramatic short-term fluctuations, these two companies offer a more stable investment opportunity in the money-making world of finance, with Facebook's revenue and EPS projected to grow by 21% and 52%, respectively, in 2024. Similarly, Pinterest expects a 19% revenue growth and 43% adjusted EBITDA growth for 2024. Investing in these companies could be a wise decision for those seeking sustainable returns from the investing sphere.
