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SHOULD YOU FORGET TRUMP MEDIA AND BUY THESE 2 TECH STOCKS INSTEAD?

By Leo Sun – Nov 20, 2024 at 4:37AM

Key Points

 * Trump Media is still an overvalued meme stock that is running on fumes.
 * Meta offers a more balanced way to profit from the social media market's
   growth.
 * Pinterest has carved out a defensible, high-growth niche in Meta's shadow.
 * Buy Alert: Our 10 best stocks to buy right now (see the list)


NASDAQ: DJT


TRUMP MEDIA & TECHNOLOGY GROUP



Market Cap
$6B

Today's Change
Arrow-Thin-Down
(0.60%) $0.18
Current Price
$30.05
Price as of November 20, 2024, 3:27 p.m. ET


Meta and Pinterest are much more reliable social media plays.

Trump Media & Technology Group (DJT 0.60%), 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 (META 0.22%) and
Pinterest (PINS -1.68%).


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.


Arrows-In Collapse



NASDAQ: META

Meta Platforms
Today's Change
(0.22%) $1.22
Current Price
$562.31
Arrow-Thin-Down
YTD1w1m3m6m1y 5y
+181.69%
Price VS S&P
META


KEY DATA POINTS

Market Cap
$1,416B
Day's Range
$554.20 - $566.35
52wk Range
$313.66 - $602.95
Volume
6,244,878
Avg Vol
11,886,417
Gross Margin
81.50%
Dividend Yield
0.27%

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.


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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.


Arrows-In Collapse



NYSE: PINS

Pinterest
Today's Change
(-1.68%) -$0.50
Current Price
$29.19
Arrow-Thin-Down
YTD1w1m3m6m1y 5y
+56.68%
Price VS S&P
PINS


KEY DATA POINTS

Market Cap
$20B
Day's Range
$28.93 - $29.88
52wk Range
$27.00 - $45.19
Volume
3,571,174
Avg Vol
8,749,525
Gross Margin
78.93%
Dividend Yield
N/A

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.


SHOULD YOU INVEST $1,000 IN TRUMP MEDIA & TECHNOLOGY GROUP RIGHT NOW?

Before you buy stock in Trump Media & Technology Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are
the 10 best stocks for investors to buy now… and Trump Media & Technology
Group wasn’t one of them. The 10 stocks that made the cut could produce monster
returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000
at the time of our recommendation, you’d have $900,893!*

Now, it’s worth noting Stock Advisor’s total average return is 902% — a
market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out
on the latest top 10 list.

See the 10 stocks



*Stock Advisor returns as of November 18, 2024





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.


MOTLEY FOOL ISSUES A.I. BUY ALERT

This tech could reach $80 trillion. Imagine a technology worth over 24 Nvidias.

What in the world could be worth 24 Nvidias? The answer is a radical tech
breakthrough that our experts think is transforming every walk of life. And this
giant leap forward has many on Wall Street very excited.

Learn more ›

Related Articles

Why Trump Media Stock Plummeted This Week
Is Trump Media Stock Heading Back to All-Time Highs?
Should You Buy Trump Media Stock Based on a Trump Victory?
Why Trump Media Stock Is Soaring Today
Better Social Media Stock: Trump Media vs. Rumble
902%
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