Two stocks that could benefit from President Donald Trump's popularity this year are Trump Media & Technology Group (NASDAQ: DJT) and Newsmax (NYSE: NMAX). The former was launched by Trump in 2021 when he created the Truth Social platform, while the latter features a conservative cable channel that the president has endorsed in the past. Newsmax recently went public, but Trump Media's stock has been around for a little over a year after merging with Digital World Acquisition Corp.
Which of these two stocks is likely to perform better this year and over the long haul?
The case for Trump Media
Trump Media stock is more closely aligned with President Trump's brand and image. It involves his Truth Social platform and streaming business.
The company has also been looking at crypto as a growth opportunity, recently partnering with crypto.com, which plans to offer exchange-traded funds comprising both digital and non-digital assets. Among the possible ETFs that could soon be available are a "Made in America" ETF and a "Bitcoin Plus" fund. While the details of those funds are not known, Trump Media has applied to trademark investment products with those names.
Trump Media is also well-funded, finishing last year with $777 million in cash and short-term investments. That liquidity can give the business lots of runway to grow even as it's still burning through cash. The company's net sales totaled just $3.6 million last year, but with plans to offer more services and greater opportunities for monetization ahead, there could be strong growth on the horizon for the company.
The case for Newsmax
Shares of Newsmax went public last month and at a market cap of less than $2 billion, it's a cheaper option than Trump Media stock (worth nearly $5 billion). And the company also has a much more established business today, centering around its cable channel and website.
Last year, Newsmax reported more than $171 million in revenue, with its top line growing by 26% year over year. The company incurred a loss of more than $72 million but with strong gross profit margins of around 50%, there may be hope for the business to one day turn a profit as it scales its operations and adds to its subscribers.
With the company focused on conservative news, it could stand to benefit from President Trump's strong popularity. Newsmax rose in prominence during Trump's first presidential term as he soured on once-favored Fox News, which he called "unwatchable" back in 2020.
Which stock is the better buy?
Although both media stocks present risks and neither is a safe buy, if you're deciding between the two, I'd go with Newsmax.
At this stage, Trump Media doesn't seem to be much more than a meme stock. It isn't generating much revenue, and simply having a strong cash balance doesn't make it an investable business. It's a speculative buy, and year to date, it has fallen more than 36%. What's concerning is that even amid that decline, it still looks egregiously overpriced and has plenty of room to fall even lower.
Almost by default, Newsmax looks to be the better option right now. Its valuation is lower, and its business is growing quickly. But with steep losses, it's not a safe stock to own either. However, with an established business and more modest valuation, I expect it'll outperform Trump Media this year and beyond.
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David Jagielski 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.
