When some of the biggest asset managers in the world start gobbling up shares of a company that barely makes any money, one is compelled to pause for a bit and wonder: "what do they know that I don't?" Look no further than Trump Media and Technology Group (NASDAQ: DJT) as an emblematic example of this phenomenon.
For the benefit of those who might not be aware, Trump Media and Technology Group is the parent entity of the Truth Social platform, the Truth Plus content streaming service, and the soon-to-be-launched asset management and ETF service under the Truth.Fi banner.
Despite its growing product portfolio, the company has yet to show any material earnings. For the year that ended on the 31st of December, Trump Media and Technology Group reported just $3.6 million in sales. What's more, when you remove the amortization of deferred revenue from this figure, actual billings for the year amount to just ~$200,000 (unearned revenue on the balance sheet declined from $4.41 million to 1.01 million by the end of 2024, implying unearned revenue recognition of $3.4 million vs. reported sales of $3.6 million).
Nonetheless, Trump Media and Technology Group does have one thing going for it: its gigantic post-SPAC-merger cash balance. And, the company is now beginning to deploy its copious cash coffers to bolster its earnings.
As we previously reported, Trump Media's board has now approved the diversion of up to $250 million from its current reserve of around $700 million in cash and cash equivalents towards setting up customized Separately Managed Accounts (SMAs) and ETFs, including one dedicated to Bitcoin, under the Truth.Fi banner and in partnership with Charles Schwab and Yorkville advisors.
Coming back, the requisite Form 13-F filings for the previous quarter - which are now available for public scrutiny - contained a shocker: Vanguard, BlackRock, and Citadel increased their stake in Trump Media and Technology Group by a combined 7.8 million shares, and this is before the launch of the company's asset management service under the Truth.Fi banner.
Of course, it is quite likely that these asset managers were simply betting on President Trump's star power to drive further gains. After all, DJT is not a stock that trades on fundamentals.
Meanwhile, in another unusual development, Trump Media and Technology Group has now sued a Brazilian supreme court judge in Miami for illegally censoring right-wing voices on social media. The judge in question is currently overseeing a number of investigations into the affairs of the former Brazilian president and a staunch Trump ally, Jair Bolsonaro.
