Donald Trump and Elon Musk are often compared. The former president and Tesla CEO are both billionaire populists on the right, with millions of die-hard fans and high negatives. But what about their respective stocks Trump Media & Technology and Tesla? Which is the better meme stock?
GameStop and AMC Entertainment are the original meme stocks. They shared several qualities that helped GME and AMC, at least briefly, skyrocket.
Both had existing but struggling businesses in industries that were seemingly in secular decline. GameStop is a mall-based video game retailer while AMC is a theater giant as movie attendance has trended lower.
Because of those fundamental headwinds, GME stock and AMC were heavily shorted.
GME and AMC, under new leadership, promised massive growth by transforming the companies into something vastly different.
That helped provide a catalyst for a social-media coordinated buying, spurring huge short squeezes that added to the momentum.
Both DJT stock and Tesla boast some qualities of a meme stock but are lacking others.
DJT Stock
Truth Social parent Trump Media has been able to generate social media frenzy like a meme stock.
The Trump Media business is definitely struggling. Days after DJT stock came public via a SPAC merger, Trump Media disclosed that it had roughly $800,000 in revenue in the fourth quarter.
Several years into existence, Truth Social has barely any advertising revenue. Partly that's due to relatively few active users. Also, advertisers generally try to avoid controversy, with partisan media of all kinds struggling to attract ad dollars at discounted rates.
Where Trump Media falls short as a meme stock is that the company isn't promising a big strategic shift into high-growth fields. It's basically doing what it's going to be doing — and it's not doing very well.
In a best-case scenario, Truth Social becomes a serious rival to Elon Musk's X. But X isn't profitable right now.
Trump Media stock skyrocketed to 79.38 as it debuted in late March, but has quickly fallen back to 32.59 as of April 12, below its pre-SPAC level.
DJT stock plunged 18.35% to 26.61 on Monday as Trump Media filed to sell millions of shares.
Short interest in DJT stock is not extreme yet. Demand for shorting the stock is high, while sky-high shorting fees are coming down.
Tesla Stock
While meme stocks come and go, no company or stock has sustained the level of buzz that Tesla has for the past decade. Rumors, Elon Musk's vague comments — even posts he "likes" on X — get a lot of attention and move TSLA stock.
After a 2019-2022 run of booming growth, Tesla's business is struggling, with earnings tumbling in 2023 and headed for another down year in 2024. The company itself has said it's in between two growth waves. The next wave could be several years away, especially if a new small EV gets pushed out beyond 2026.
On April 15, Tesla announced major layoffs. TSLA stock fell 5.6% to 161.48 near 11-month lows.
In classic meme stock fashion, Elon Musk promises massive growth and profits from Full Self-Driving as well as other moonshots such as robotics and AI. Millions of fans, as well as many institutional investors and Wall Street analysts, see Tesla as being a huge winner from FSD or other moonshot opportunities long term.
Tesla already generates profits via FSD sales and subscriptions, but it's still a Level 2 system for now. A true vision-only self-driving system would be a huge boon to Tesla.
One problem is that a lot of that promise is already priced into Tesla stock. TSLA stock has a 2024 price-to-earnings ratio above 60, even with the share price tumbling for several months.
If Tesla were valued like a traditional automaker, with a forward P-E ratio of 4-10, then it would be much easier to see big runs based on FSD promise.
Also, while a lot of Tesla shares are shorted in dollar terms, short interest is relatively low compared to how much the megacap stock trades. So short squeezes aren't as powerful as they were in the past.
Meme Stocks Aren't Doing So Well
GameStop stock exploded from 1.00 at the end of July 2020 to a peak of 121.75 in January 2021. Nearly all of the gains were in the last month. Shares have been volatile since then, but the trend has been clearly down. Shares tumbled 6.6% on Monday to 10.06, a fresh three-year low. GME stock is still well above its pre-meme levels though.
AMC stock exploded in January 2021, from a then-record low of 10.35 to finish the month at 71.88. Shares consolidated for a time, then spiked again in May of that year, peaking at 393.65 in early June. Since then, shares have sold off, especially from August 2023. AMC stock skidded 6.8% to 2.47, hitting yet-another record low.
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