With the election less than two weeks away, stocks that will be directly affected by the results are getting a lot of attention from investors. Being among them Trump Media & Technology Group (DJT 11.19%) And Clutter (RUM 7.04%).

Trump Media needs little introduction. The company, which owns the social media platform Truth Social, was founded after the former president was kicked off Twitter in the wake of the Jan. 6 chaos at the U.S. Capitol. The company went public earlier this year via a special purpose acquisition company (SPAC) and has been a volatile stock ever since. Investors mainly see it as an indicator of Trump’s election prospects, and not as an investment in a company.

Rumble, which is primarily concerned with exploiting a right-wing alternative to YouTube, also moves in relation to election news and Trump’s prospects.

Both stocks offer similar qualities and appeal to the same groups of investors, but which is the better buy right now? Let’s investigate.

Image source: Getty Images.

Business Model: Trump Media vs. Rumble?

Trump Media’s main business is the Truth Social platform, which was founded as a “free speech”-friendly Twitter-like platform following Trump’s ban on Twitter (since renamed X). However, Trump Media plans to go beyond Truth Social and recently launched its Truth+ streaming service on some platforms.

The company plans to expand both platforms as it adds content to its streaming service. Truth Social doesn’t report monthly users, but according to SimilarWeb, it averaged about 4 million visits between May 2023 and April 2024.

Rumble, on the other hand, makes most of its revenue from advertising. The company ended the second quarter with 53 million monthly active users.

In addition to the video-sharing platform, Rumble also launched its own cloud infrastructure service, competing with tech giants like Amazon And Microsoft by offering hosting services. Although Rumble Cloud makes up a small part of its business, the company has attracted some advertisers from its video platform to use its cloud hosting service, showing that the two companies can be complementary.

Financial Sector: Trump Media vs. Rumble

While Trump Media has received a lot of attention from investors so far, the company is negligible from a financial perspective. In the second quarter, Trump Media reported just $836,900 in revenue, down from $1.19 million in the year-ago quarter.

Not surprisingly, the company is losing money. It recorded an operating loss of $18.7 million, mainly due to spending on general and administrative expenses, which most likely consists of management salaries.

Rumble, on the other hand, has significant revenue, but is also small. It brought in $22.5 million in revenue in the second quarter, compared to $25 million in the year-ago quarter. Rumble is also losing money, reporting an operating loss of $38.8 million.

Rating: Trump Media vs. Rumble

Trump Media generates little revenue, but the company has a market cap of $8 billion, putting it in competition with established media companies such as New York Times Company And Big global. In other words, the company appears grossly overvalued based on its fundamentals.

Rumble, on the other hand, has a price-to-sales ratio of 14.2, which is expensive, especially for a company that just reported a revenue decline. That seems reasonable, though, compared to Trump Media. Rumble currently has a market cap of $1.6 billion.

Which is the better buy?

The bull case for Trump Media appears to be that shares will rise if Trump wins the election, but it’s not clear how a win would directly benefit the company. It’s possible that if Trump returns to the White House, advertisers will be motivated to spend money on the platform to curry favor with him.

However, the company could easily remain in trouble, and investors wouldn’t have the potential catalyst for Trump’s election to boost the stock. In other words, the election could be a “buy the rumor/sell the news” event for Trump Media.

Rumble, on the other hand, is a real company that could actually benefit more from Trump’s election because the platform is more established than Truth Social. If Trump becomes president, it could lead to more traffic on the site and therefore more ads.

While both stocks appear overvalued based on their most recent quarterly results, Rumble, which has a viable business, is the better buy of the two.