Why Trump Media Stock Sank Today

Trump Media (NASDAQ: DJT) stock saw substantial sell-offs in Tuesday's trading. The company's share price closed out the daily session down 7.5% and had been down as much as 11% earlier in the day's trading.

Trump Media posted big gains in Monday's trading in anticipation of Donald Trump's presidential inauguration next week, but the company's stock lost ground today. The social media specialist's share price fell in conjunction with Senate confirmation hearings for Pete Hegseth -- Donald Trump's nominee for defense secretary.

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Trump Media stock is volatile amid Senate confirmation hearings

In some ways, Hegseth's confirmation hearing today presents the first test for the incoming Trump administration. The hearing has been a contentious one -- with Democrats raising concerns about the nominee's background and suitability for the job.

Some degree of pressing and pressure from the opposition party is par for the course when it comes to the approval of presidential cabinet picks, but Hegseth's confirmation process is being treated as particularly significant by some political analysts. While the outcome of today's Senate hearings and hearings for other cabinet nominees is unlikely to affect Trump Media's business fundamentals, the results could cause near-term moves for the stock.

What comes next for Trump Media?

Despite recent volatility, Trump Media stock has been off to an impressive start early in 2025's trading. Even with today's pullback, the company's share price is up 16.5% year to date as of this writing.

Thus far, gains for the stock have largely been driven by expectations that shares could continue to rally in conjunction with tailwinds created by Trump returning to the presidency. With the company's last quarterly report, Trump Media's core business posted sales of just $1 million. While Trump Media did record interest income of $4.7 million in the quarter, it reported a net loss of $19.2 million in the period.

With a market capitalization of roughly $8.5 billion, Trump Media has a valuation that prices in explosive future sales and earnings growth. Some investors are betting that the company could make a play in the cryptocurrency space or make moves to dramatically ramp up its social media and streaming businesses. But with the stock trading at such a hugely growth-dependent valuation, shares look risky at current prices.

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Keith Noonan 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.