Trump Media Stock Is Primed for a Small-Stakes Buy Ahead of November

It’s one of the most divisive social-media companies in the U.S. Trump Media & Technology Group (NASDAQ:DJT), typically shortened to Trump Media, is certainly controversial. However, if you’re willing to keep an open mind and focus on the profit potential, there just might be a worthy buying opportunity with Trump Media stock.

That said, it’s important to maintain a small position size due to the share-price volatility risk in 2024’s second half. Trump Media is in a pretty good financial position, but upcoming events could turn Trump Media’s shareholders into princes or paupers.

Some Positive News About Trump Media

Before getting into the volatility catalysts, it’s worth noting some good news pertaining to Trump Media. First of all, Trump Media joined the small-cap Russell 1000 and broad-market Russell 3000 indexes. Consequently, Trump Media stock will undoubtedly be included in some funds that comprise those indexes.

Second, while some commentators might call Trump Media’s financials into question due to a first-quarter net earnings loss, this doesn’t mean the company is at imminent risk of running out of money. Indeed, Trump Media has a sizable capital runway to continue its operations, with “more than $350 million in cash — and no debt — on its balance sheet as of July 1, 2024.”

Furthermore, Trump Media’s capital runway might extend for quite a while longer. That’s because the company entered into a “standby equity purchase agreement” with an investment fund managed by Yorkville Advisors. For three years, Trump Media will have the “option, at its sole discretion, to issue up to $2.5 billion in shares of common stock” to Yorkville Advisors.

Don’t Be Complacent About Trump Media

Curiosity may have killed the cat but complacency will kill your portfolio if you allow it to. Sure, I just pointed out several positive developments concerning Trump Media but the rest of 2024 could be a veritable roller-coaster ride.

After all, the fate of Trump Media stock will depend to a great extent on what happens to former president and current presidential candidate Donald Trump. The outcome of Election Day on Nov. 5 will probably have a substantial impact on the Trump Media share price.

Also, the 2024 election saga might not end in 2024. Like the past two presidential elections, this one might be disputed by one party or another. This could cause the Trump Media share price to wobble for a while.

In addition, the sentencing for Trump’s hush-money convictions reportedly won’t take place until Sept. 18 or later. Since there are multiple “known unknowns” at play here, it’s difficult to make any meaningful predictions about Trump Media stock.

Trump Media Stock: Position Sizing Is Crucial

I’m certainly not trying to dissuade anyone from investing in Trump Media & Technology Group. It’s a decision you have to make, based on your beliefs and your risk tolerance.

Prospective investors might note that Trump Media has a substantial capital runway that could extend for the foreseeable future. This may be encouraging but please don’t overload your portfolio with Trump Media stock. If you invest in Trump Media, it’s wise to mitigate the volatility risk by keeping your position size small.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.