Both stocks are moving with the presidential candidate, but which is the better buy?
With the election less than two weeks away, stocks that will be directly affected by the results have been getting a lot of attention from investors. Among those are Trump Media & Technology Group (DJT 11.45%) and Rumble (RUM 3.27%).
Trump Media needs little introduction. This company, which owns the Truth Social social media platform, was created after the former president was kicked off of Twitter in the wake of the Jan. 6 mayhem at the U.S. Capitol. The company went public through a special purpose acquisition company (SPAC) earlier this year and has been a volatile stock since then. Investors see it primarily as an indicator of Trump’s electoral prospects, rather than an investment in a business.
Rumble, with a primary business of operating a right-wing alternative to YouTube, also moves in relation to election news and Trump’s prospects.
Both of these stocks offer similar qualities and appeal to the same groups of investors, but which is the better buy right now? Let’s investigate.
Image source: Getty Images.
Business model: Trump Media vs. Rumble?
Trump Media’s primary business is the Truth Social platform, which was started as a “free speech”-friendly Twitter-like platform after Trump’s ban from Twitter (since renamed X). However, Trump Media envisions expanding beyond Truth Social and recently launched its Truth+ streaming service on some platforms.
The company plans to ramp up both those platforms as it adds content to its streaming service. Truth Social doesn’t report monthly users, but according to SimilarWeb, it averaged about 4 million visits from May 2023 to April 2024.
Rumble, on the other hand, earns most of its revenue from advertising. The company finished the second quarter with 53 million monthly active users.
In addition to the video-sharing platform, Rumble also launched its own cloud infrastructure service, competing with tech giants like Amazon and Microsoft by offering hosting services. While Rumble Cloud is a small part of its business, the company has attracted some advertisers from its video platform to use its cloud hosting service, showing that the two businesses can be complementary.
Financials: Trump Media vs. Rumble
Although Trump Media has gotten a lot of attention from investors so far, the business is negligible from a financial perspective. In the second quarter, Trump Media reported just $836,900 in revenue, which was down from $1.19 million in the quarter a year ago.
Not surprisingly, the company is losing money. It posted an operating loss of $18.7 million, due primarily to spending on general and administrative expenses, which are most likely management salaries.
Rumble, on the other hand, does have meaningful revenue, but it’s also small. It brought in $22.5 million in revenue in the second quarter, down from $25 million in the quarter a year ago. Rumble is also losing money, reporting an operating loss of $38.8 million.
Valuation: Trump Media vs. Rumble
Trump Media has hardly any revenue coming in, but the company has a market cap of $8 billion, putting it in league with well-established media companies like New York Times Company and Paramount Global. In other words, the business seems grossly overvalued, based on its fundamentals.
Rumble, on the other hand, has a price-to-sales ratio of 14.2, which is expensive, especially for a company that just reported a decline in revenue. However, that seems reasonable, compared to Trump Media. Rumble currently has a market cap of $1.6 billion.
Which is the better buy?
The bull case for Trump Media seems to be that the stock will jump if Trump wins the election, but it’s not clear how a victory would directly benefit the company. It’s possible that if Trump returns to the White House, advertisers will be motivated to spend money on the platform to curry favor with him.
However, the business could easily continue to struggle, and investors wouldn’t have the potential catalyst of Trump’s election to give the stock a lift. In other words, the election could be a “buy the rumor/sell the news” type of event for Trump Media.
Rumble, by contrast, is a real business that could actually benefit more from Trump’s election as its platform is more established than Truth Social. If Trump becomes president, it could lead to more traffic on the site and, therefore, more advertising.
While both of these stocks look overvalued based on their most recent quarterly numbers, Rumble, which has a viable business, is the better buy of the two.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Microsoft, and The New York Times Co. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.