Why Trump Media Stock Is Soaring Today

Trump Media (NASDAQ: DJT) stock is climbing in Wednesday's trading. The company's share price was up 8% as of 11:45 a.m. ET and had been up as much as 34.9% earlier in the day's trading.

Trump Media stock has often made big moves in conjunction with events in the 2024 presidential election. With voting now concluded and victory being called for Donald Trump, the company's share price is surging.

Last week's polls suggested the 2024 presidential race had tightened

Following yesterday's voting, The Associated Press has announced that Donald Trump has won the 2024 presidential election. The Republican candidate significantly outperformed most expectations and is poised to win most major swing states. Defying many projections, Trump is also on track to win the national popular vote.

Trump Media has become a meme-stock trade, and some investors have been using the stock as a way to bet on election momentum and results. Now that the Republican won the election by margins that have exceeded most expectations, the company's share price is seeing big gains today.

Trump Media also unexpectedly published its third-quarter results yesterday, but the gains for the stock likely have little to do with the report. The company's stock is now up 125% over the last month.

What's next for Trump Media stock?

In the very near term, Trump Media stock could see continued bullish momentum due to election-related excitement. It's possible that the election victory for the Republican candidate will boost the Trump Media's brand value and help power continued stock gains.

On the other hand, there's also a risk that investors will move to take profits on the stock now that it has seen huge gains on the heels of the election and Trump's victory in the race. The moderation of the stock's gains today suggests that's already happening to some extent.

While the election results are powering gains for the stock, Trump Media's long-term outlook remains highly speculative -- and the company trades at a hugely growth-dependent valuation. The business reported sales of just $1 million in the third quarter and recorded an operating loss of $23.7 million.

While the operating loss doesn't look particularly concerning, given that the business closed out the quarter with $673 million in cash and equivalents and zero debt, the business is generating low levels of revenue and needs to attract more users and improve monetization for its Truth Social media platform and streaming offerings. Given the company's current sales profile and roughly $7.1 billion valuation, Trump Media stock looks very risky right now.

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Keith Noonan 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.