This chart shows just how absurd Trump Media's valuation is

Donald Trump created Truth Social after he was banned from X, formerly Twitter. NurPhoto/Getty Images

• It’s well known that Trump Media stock trades at a premium valuation, but one chart shows just how absurd it is.
• Trump Media is the parent company of Donald Trump’s Truth Social, which went public in March.
• The stock market is currently assigning a value of about $1,300 for every Truth Social user.

A lot has been written about Trump Media and Technology Group’s premium valuation, but one chart really helps put it into perspective.

Trump Media is the parent company of Truth Social, which went public in March via a SPAC merger.

The social media company, founded by former President Donald Trump, has a market valuation of nearly $7 billion.

In terms of actual business operations, Trump Media disclosed that it lost $58 million on about $4 million in revenue in 2023.

Those losses mean you can’t use the traditional price-to-earnings ratio to value the company and compare it to its peers, because it isn’t yet profitable. You can, however, value the company on a price-to-sales basis, which at 1,590x is in the stratosphere.

For comparison’s sake, Meta, Pinterest, Snap, and Reddit trade at an average price-to-sales ratio of 8.3 times.

Another way to value the profitless Trump Media is to compare its current market valuation to its monthly active user base.

That’s exactly what JPMorgan’s Michael Cembalest did, building the chart below in a note to clients late last month. The chart divides the market value of social media companies by the number of monthly active users on its platform.

“Alex W from MSNBC asked me what I think of Truth Social’s valuation. My response:,” Cembalest wrote, followed up with the chart below.

JPMorgan

Based on estimates that Truth Social has 5 million monthly active users, the stock market assigned a value of $890 per Truth Social user in late April.

Since Trump Media’s recent stock surge,that valuation has surged to $1,309 per Truth Social user, and at its peak in March, each Truth Social user was worth $1,794.

That’s more than double TikTok’s $588 value per user, more than triple Meta’s $408 value per user, and more than 10x the value assigned to the monthly active users of Pinterest, Snapchat, and Reddit.

So, why the premium valuation?

According to Interactive Brokers’ market strategist Steve Sosnick, it has to do with the fact that millions of Americans have a “quasi-religious fervor” for Donald Trump.

“I have always believed that the company’s most devoted investors viewed it as a call option on the MAGA movement, which of course has its own highly devoted proponents. It is hardly unreasonable to expect that many of those devotees would vote for their preferred candidate with their wallets,” Sosnick said in March.

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