DJT stock could be at risk as Trump Media headwinds rise

The DJT stock price has collapsed this year as the company’s pivot to the crypto industry backfired, its core business struggled, and Donald Trump’s approval ratings plunged. Trump Media stock was trading at $11.30 on Thursday, a few points above the year-to-date low of $10.18. It remains much lower than the November high of $54.60.

Trump Media’s pivot to crypto has backfired

A key approach in business earlier this year was that many struggling companies pivoted to the crypto industry, hoping to become as successful as Michael Saylor’s Strategy, which transformed from a struggling software company into a multi-billion-dollar company by just accumulating Bitcoin.

Strategy’s stock soared, with its market capitalization hitting over $120 billion at its peak. Most importantly, the gap between its market capitalization and its Bitcoin holdings continued to extend, which made it easier for the management to raise capital and continue its accumulation. 

Trump Media, a company whose social media app failed to gain traction, entered the industry and accumulated 11,542 coins at an average price of $118,529. The hope was that this accumulation would give it a high premium, as Strategy had before.

However, this accumulation happened at the wrong time as Bitcoin was starting to decline, eventually reaching a low of $80,000. The company’s Bitcoin holdings are now down by 24% from that purchase price.

At the same time, demand for Bitcoin treasury companies has largely faded, with most of them having a negative market net-asset value (mNAV). In a shocking statement recently, Strategy’s CEO warned that the company may be forced to sell some of its Bitcoin holdings to pay its dividends.

To be clear: it is likely that the Bitcoin price will eventually rebound as it has done many times before. Such a move will likely lead a higher value to Trump Media’s coins and possibly that stock.

The Truth Social app has not gained traction 

The DJT stock price has also imploded as Truth Social, its social media platform, failed to gain traction.

Donald Trump launched  Truth Social when Facebook, Twitter, and other social media platforms banned him. There were increased concerns that these big Silicon Valley companies were discriminating against Conservatives.

However, one major thing changed: Elon Musk acquired Twitter and changed its name to X. Most importantly, he allowed free speech by letting people express themselves without much intervention.

As a result, most people who would have used Truth Social turned back to X, which is a bigger and more vibrant network with people from across the political divide.

Website traffic data shows that Truth Social users have stalled, with Trump being the only major person on the network. Its traffic has been in a strong downward trend in the past few months, a move that has coincided with his falling approval rating.

At the same time, there was hope that advertisers seeking favor with the president would advertise on the platform, mirroring what they did with his hotel in the last administration. However, this has not been the case as the company is now making less than $1 million quarterly.

DJT stock price technical analysis 

The daily timeframe chart shows that the Trump Media stock price has been in a strong downward trend this year and has continued making a series of lower lows and lower highs.

The stock recently dropped below the important support level at $15.50, its lowest level in April and August.

DJT stock has moved below all moving averages and is now forming a bearish flag pattern. Therefore, the most likely scenario is where the stock continues falling, potentially to the key support level at $5. The bearish outlook will become invalid if it moves above the key resistance level at $15.52.

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