The premarket rally turned into a big drop as investors tried to gauge what the jury verdict means for Truth Social's parent company.
of stocks Trump Media & Technology Group (D.J.T. -5.30%) The stock price rose 5% overnight but fell 8% at the opening on Friday following the conviction of Donald J. Trump in a felony case in New York. Investors are paying attention to the headlines, but it's unclear what effect they will have on the business.
Separating people from business
Trump Media is the parent company of Truth Social, a social media platform promoted by the former president as an alternative to what was then called Twitter. While Trump remains one of the platform's most prominent users, he has not been named to its board of directors or served on its board of directors.
Late Thursday, a Manhattan jury found Trump guilty of 34 counts of falsifying business records related to hush money paid to Stephanie Clifford, a porn actress known by her stage name Stormy Daniels, during the 2016 presidential campaign. Trump is scheduled to be sentenced on July 11, but it is not clear at this time whether he will serve any prison time on the charges.
It's also unclear what the ruling means for Trump Media. On one hand, the risk of one of the social network's most active users going to jail and a magnet for other users could tarnish the brand. On the other hand, the renewed focus on Trump could also attract new users to the social media site.
Is now the time to buy Trump Media stock?
Separating emotion from business, it's hard to get too excited about Trump Media stock, which has only just gone public but has already had to overcome accounting problems and whose numbers are tiny for a company valued by the market at more than $9 billion.
Trump Media generated just $3.79 million in revenue over the past 12 months, with an EBITDA loss of $110.4 million over the same period.
Trump's influence is huge, but it takes more than one person to make the social network a success. Politics aside, investors are best off watching this unfold from the sidelines.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
