Trump Media & Technology Group (NASDAQ: DJT), the company behind Truth Social, has led investors on a turbulent journey since it became public through a merger with a special purpose acquisition company (SPAC) on March 26, 2024. Initially priced at $70.90, the stock plummeted to a low of $12.15 on September 23, and is currently around $33.

In 2023, Trump Media earned $4.1 million, but also reported a substantial net loss of $58.2 million. In the first three quarters of 2024, revenue diminished to $2.6 million, while the net loss ballooned to an astounding $363 million. With an enterprise value of $5.44 billion, the stock’s price is an extraordinary 1,322 times last year’s revenue, indicating it’s more of a meme stock, heavily influenced by media coverage related to President-elect Donald Trump rather than showcasing a viable business model.

What sets Trump Media apart from other social media firms is its lack of transparency regarding active users, ad impressions, and average revenue per user, leaving investors with limited financial data to evaluate the business’s health. Although the company is preparing to launch a streaming video service, entering that market is notoriously costly.

Rather than getting swept up in Trump Media’s unpredictable price shifts and hoping for growth, long-term investors may want to consider investing in two more stable social media companies: Meta Platforms (NASDAQ: META) and Pinterest (NYSE: PINS).

The social media giant: Meta Platforms

Meta stands as the largest social media company globally, serving 3.29 billion daily active users across its platforms (Facebook, Instagram, Messenger, and WhatsApp) in its most recent quarter, a 5% increase from the previous year. In 2023, Meta saw a revenue increase of 16% and earnings per share (EPS) soaring by 73%. For 2024, analysts predict revenue growth of 21% and a 52% rise in EPS.

This growth has been fueled by a favorable economic climate, the popularity of its Reels short video feature, and increased advertising from Chinese e-commerce and gaming sectors. The strong performance of its advertising business, which constituted 98% of its revenue last year, has helped offset the ongoing deficits in its Reality Labs division, known for its virtual and augmented reality offerings.

While Meta is investing heavily in its cloud infrastructure, artificial intelligence (AI), and Reality Labs, it still managed to buy back $30.1 billion in shares and distribute $3.8 billion in dividends in the first nine months of 2024.

Analysts expect further revenue growth of 15% and an additional 12% increase in earnings for 2025. With a forward earnings valuation of 22 times, Meta’s stock remains reasonably priced, offering potential for growth as it attracts more users and advertisers.

The steady niche player: Pinterest

Pinterest has established a unique space within the social media landscape through its virtual pinboards designed for sharing ideas, interests, and hobbies. The platform enjoyed significant growth during the pandemic as more users sought online shopping ideas, recipes, and family activities from the comfort of their homes. However, its expansion slowed as lockdowns eased and people returned to outdoor activities.

Despite this, Pinterest still shows growth. In 2023, its revenue increased by 9%, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 55%, and its monthly active users (MAUs) grew by 11% to reach 498 million. By the third quarter of 2024, this number climbed to 537 million, dispelling doubts that it was just a trend from the pandemic era.

For the full year, analysts forecasted revenue growth of 19% and a 43% increase in adjusted EBITDA. Looking ahead to 2025, projected growth is expected to be 16% in revenue and 25% in adjusted EBITDA, with profitability anticipated under Generally Accepted Accounting Principles (GAAP) this year.

This growth is primarily attributed to its rising popularity among Generation Z users, who now represent over 40% of its user base, as well as the integration of more short video content, innovative AI-driven recommendations, enhanced e-commerce functionalities for its “shoppable” pins, and expansion into international markets. At a valuation of just 13 times next year’s adjusted EBITDA, Pinterest’s stock appears incredibly undervalued compared to its growth trajectory.

Randi Zuckerberg, a former director of market development and spokesperson for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, serves on The Motley Fool’s board. Leo Sun holds stock in Meta Platforms. The Motley Fool owns shares in and recommends Meta Platforms and Pinterest. Please refer to their disclosure policy for details.

The Motley Fool partners with YSL News to provide financial news, analysis, and commentary to empower individuals in their financial decisions. All content is produced independently from YSL News.

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