Better Trump Stocks to Buy: Trump Media vs. Rumble

With the election less than two weeks away, stocks that will be directly affected by the results have received significant attention from investors. Among them are Trump Media & Technology Group (DJT 13.79%) And Rumble (RUM 6.07%).

Trump Media needs little introduction. This company, which owns the social media platform Truth Social, was founded after the former president was banned from Twitter following the chaos at the US Capitol on January 6th. The company went public via a special purpose acquisition company (SPAC) earlier this year and has been a volatile stock ever since. Investors see this primarily as an indicator of Trump's election prospects and not as an investment in a company.

Rumble, whose main business is running a right-wing alternative to YouTube, also moves on election news and Trump's prospects.

Both stocks offer similar qualities and appeal to the same types 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 main business is the platform Truth Social, which was launched as a “free speech”-friendly Twitter-like platform following Trump's ban on Twitter (now renamed X). However, Trump Media plans to expand beyond Truth Social and recently launched its Truth+ streaming service on some platforms.

The company plans to grow both platforms by adding 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, generates the majority of its revenue from advertising. The company ended 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 represents only a small portion of its business, the company has attracted some advertisers to use its cloud hosting service through its video platform, showing that the two companies can complement each other.

Finance: Trump Media vs. Rumble

Although Trump Media has received a lot of attention from investors so far, the business is negligible from a financial perspective. In the second quarter, Trump Media reported revenue of just $836,900, down from $1.19 million in the same quarter last year.

Not surprisingly, the company is losing money. It reported an operating loss of $18.7 million, primarily due to general and administrative expenses, most likely management salaries.

Rumble, on the other hand, has significant revenue, but it is also small. In the second quarter, the company reported revenue of $22.5 million, compared to $25 million in the year-ago quarter. Rumble is also loss-making, reporting an operating loss of $38.8 million.

Rating: Trump Media vs. Rumble

Trump Media barely generates any revenue, but the company has a market cap of $8 billion, putting it in line with established media companies like New York Times Company And Paramount Global. In other words, the company appears to be heavily 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 sales. However, compared to Trump Media, this seems reasonable. Rumble currently has a market cap of $1.6 billion.

Which is the better buy?

The bullshit scenario for Trump Media seems to be that the stock will rise if Trump wins the election. However, it's not clear how a win would directly benefit the company. If Trump returns to the White House, it's possible that advertisers will be motivated to spend money on the platform to curry favor with him.

However, the company could easily continue to struggle, and investors would not have the potential trigger of Trump's election to boost the stock. In other words, the election could be a “buy the rumor/sell the news” type event for Trump Media.

In contrast, Rumble is a real company that could actually benefit more from Trump's election since its platform is more established than Truth Social. If Trump becomes president, this could lead to more traffic to the site and therefore more advertising.

While both of these stocks appear overvalued based on their recent quarterly numbers, Rumble, which has a profitable business, is the better buy of the two.