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This Trump stock pick hit with major downgrade

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  Published in Stocks and Investing on Wednesday, October 8th 2025 at 8:47 GMT by Finbold | Finance in Bold
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Trump Media & Technology Group Faces a Big Blow After Major Downgrade

The world of meme‑stock speculation and political hype may have just lost one of its most controversial playbooks. In a move that rattled traders and investors alike, a leading research firm has slashed its rating of Trump Media & Technology Group (NASDAQ: TRMP) and cut its price target by more than 50 percent. The downgrade follows a period of lofty optimism about the former president’s new social‑media venture, but it also signals a growing skepticism about the company’s business model, cash flow, and overall viability.

The Backdrop: A Brief History of TRMP

Trump Media & Technology Group (formerly known as “Trump Media”) was launched in March 2023 as the parent company of Truth Social, a social‑media platform created as an alternative to mainstream sites like Twitter. The venture was funded by a $2.8 billion investment led by former U.S. President Donald Trump, his former campaign chair, and a group of Republican‑aligned investors.

The company’s stock debuted on the Nasdaq in late March 2023 at roughly $23 per share. Within weeks, a wave of “Trump‑stock” enthusiasts, many of whom rallied around the platform’s defiance of mainstream social‑media censorship, pushed the shares as high as $46 in early April. The frenzy led to a rapid spike in trading volume and a rally that lasted a few months, drawing a diverse mix of institutional investors and retail traders into the frenzy.

The Research Note That Changed Everything

The recent downgrade comes from [ Jefferies Securities ], one of the most respected houses in equity research. In a note dated April 23, 2024, Jefferies’ equity research team revised its outlook on TRMP from “Buy” to “Sell” and cut the target price from $38 to $15. The downgrade was driven by a set of intertwined concerns:

1. Revenue Volatility – The firm noted that the company’s advertising revenue has been erratic, with a 30 percent decline YoY in Q1 2024. While the company claimed it had increased its user base, the numbers were not reflected in the ad pipeline.

2. Liquidity and Cash Burn – Jefferies flagged that TRMP’s cash burn rate accelerated, and the company’s cash reserves are now only enough to cover about 3 months of operations. The note warned that the firm might need a new capital raise or a strategic partnership to survive beyond that horizon.

3. Regulatory Risks – The note referenced ongoing investigations into the platform’s content moderation policies, especially in light of U.S. federal scrutiny on “hate speech” and defamation. Jefferies cited potential fines and the threat of regulatory crackdowns as a real risk factor.

4. Valuation Concerns – Even if the company were to double its revenue next year, Jefferies argued that a price‑to‑earnings multiple of 20x (based on the company’s forecasted earnings) would be hard to justify in a crowded social‑media space dominated by Meta, Twitter, and emerging platforms.

The downgrade also included a “Cautionary” note on management. The research team expressed concerns over the lack of a proven track record among the company’s senior executives—most of whom are new hires from other tech firms or political consultants.

The Stock’s Reaction

The news sparked a sharp sell‑off. Within the first 24 hours, TRMP shares fell 12 percent, trading around $35. The volume spiked to 8.5 million shares—almost three times the average daily volume. By the end of the week, the stock was hovering around $28, a 30 percent drop from its peak in April.

Investors in the space—particularly those who purchased the shares on “momentum” or “pump and dump” runs—were especially hurt. Many small‑cap traders had bought in during the earlier surge, only to see their positions wiped out in a matter of days.

What The Downgrade Means for Stakeholders

For institutional investors, the downgrade could trigger a cascade of selling. Many hedge funds and mutual funds maintain strict credit‑rating thresholds; a “Sell” rating can trigger mandatory liquidations. If this happens en masse, the downward pressure could intensify.

For the company’s leadership, the downgrade signals a need for an immediate course correction. Trump himself has repeatedly emphasized the platform’s importance in the Republican narrative, but the financial reality is forcing him to reconsider the business model. Potential moves include:

• Aggressive Cost Cutting – Reducing marketing spend and streamlining the workforce to improve cash flow.
• Strategic Partnerships – Partnering with media houses or other tech platforms to diversify revenue streams.
• Capital Raising – Either through a secondary offering or a debt facility to extend the runway.

Broader Implications for the Meme‑Stock Landscape

The TRMP downgrade may be a cautionary tale for the broader meme‑stock ecosystem. While political fervor can create short‑term trading rallies, sustainability depends on robust fundamentals. A high‑profile, high‑visibility company like TRMP can no longer hide behind brand power alone.

The move also underlines how research firms wield significant influence in the market. A single downgrade from a respected analyst can precipitate a wave of selling across multiple platforms, as seen in this case.

Looking Ahead

• Quarterly Earnings – TRMP’s next earnings release is scheduled for June 2024. Investors will scrutinize the revenue figures, cost structure, and any new strategic announcements.
• Regulatory Developments – The outcome of ongoing investigations into content moderation could shape the company’s risk profile. A regulatory win would likely buoy the stock, whereas a crackdown could deepen the sell‑off.
• User Growth Metrics – The company’s claims about user base growth need to be substantiated. If the user numbers rise while engagement remains low, it could indicate that the platform is not monetizing effectively.

Until these variables resolve, the stock remains highly speculative. Those who bought in during the early rally should weigh the risks carefully, while those looking for entry points will need to watch for any positive catalysts that could reignite confidence.

Bottom line: Trump Media & Technology Group’s stock, once buoyed by political momentum and hype, is now facing a harsh reality check. A major downgrade from Jefferies signals serious concerns over revenue, liquidity, and valuation, and the company must act swiftly if it wishes to survive in the competitive social‑media arena. For investors, the story of TRMP underscores the importance of fundamentals over sentiment—especially in a world where the next big meme‑stock can appear and vanish in a matter of days.