Summary I'm upgrading DJT from 'sell' to 'hold' due to its recent $2.5 billion Bitcoin treasury announcement. Despite my prior bearish stance, DJT's valuation concerns remain, but the Bitcoin move introduces a new angle that could limit the stock's downside. A fresh bidder with $2.5 billion in ammo is perhaps wonderful for Bitcoin's short-term price potential. But there is a downside to this announcement, in my view. It would seem to now be politically impossible for the current Congress or administration to meaningfully grow a Strategic Bitcoin Reserve, so long as it would benefit POTUS financially. In my prior Seeking Alpha coverage of Trump Media & Technology Group Corp. ( DJT ), I've been bearish of the stock and primarily cited valuation and lack of business growth as major concerns for shareholders. While the stock hasn't fallen as far as I expected given the company's valuation relative to the size of its business, it has indeed fallen by over 30% since my initial 'strong sell' call back in October: DJT Calls (Seeking Alpha) In this article, I'll get into why I'm begrudgingly upgrading DJT from 'sell' to 'hold' in light of the company's recent Bitcoin ( BTC-USD ) treasury news, and I'll detail concerns I have more broadly for Bitcoin as a result of the announcement. For the remainder of this article, I'll be referring to Trump Media and Technology Group as TMTG. Another Meme For The Meme Stock Riders On May 27th, TMTG announced plans to raise $2.5 billion through common stock issuance and convertible notes for the purpose of buying Bitcoin to be held on the corporate balance sheet. This private placement reportedly includes 50 institutional investors, with $1.5 billion of the raise coming via common stock equity and the remaining $1 billion coming from convertible senior secured notes at 0.00%. DJT shares fell more than 10% in response to the release, and the expected close for the offering is May 29th. The purchase price of the common stock shares through the offering is $25.72 per share - so as of the May 27th close of $23.05, any shares sold through this agreement the day of the announcement are already underwater. In the past, I've argued that Bitcoin itself is very much a 'meme' even though it isn't considered a 'memecoin' akin to something like Dogecoin ( DOGE-USD ) or Pepe The Frog ( PEPE-USD ). In recent years, we've seen a preponderance of memecoins and meme stocks gaining market notoriety; I would absolutely classify DJT as the latter. So with TMTG now raising capital to buy Bitcoin in the same way that we've seen Strategy ( MSTR ) ( STRF ) and GameStop ( GME ) do in the past, we can add another layer of 'meme-dom' to DJT stock. I have two real takeaways from this announcement, and they both have to do with optics. First, the long-term business prospects for TMTG are likely quite problematic if the company is resorting to this type of strategy. And, frankly, that shouldn't be a real surprise. The company incinerates capital quarter after quarter and recently announced a net loss of $31.7 million in the three months ended March: DJT Q1 Net Loss (TMTG, 10-Q) Despite that, I'm still upgrading DJT solely because equity price declines could be limited from here if the price of Bitcoin continues to go up, as is the general expectation based on recent sentiment and capital flows. Through May 23rd, investor demand for Bitcoin-based financial products has eclipsed $10 billion year-to-date, with nearly $5.5 billion of that net flow coming in May alone. My second takeaway from the TMTG Bitcoin news is specific to BTC. SBR Dreams All But Over Assuming TMTG goes through with a planned Bitcoin acquisition that totals $2.5 billion, it would make the company the fourth largest holder of BTC in the public equity markets almost immediately: Company BTC Balance USD Value Strategy 580,250 $62,407 MARA Holdings ( MARA ) 48,137 $5,180 XXI 31,500 $3,390 TMTG 23,300* $2,500 Riot Platforms ( RIOT ) 19,211 $2,066 Source: Bitcoin Treasuries, as of 5/28, *estimated based on $107.5k BTC price It's important to keep in mind that buying over 23k BTC at current prices would have an impact on the market. Thus, TMTG is unlikely to be able to acquire that much BTC with $2.5 billion without a larger correction in the price of BTC first. Strategy was able to buy roughly 25k BTC in May, but the market moved considerably during those acquisitions. Strategy's May purchases started with a BTC price closer to $95k and resulted in a coin price that briefly took out $110k. To be fair, Strategy is not moving the market alone. As mentioned in the prior section, there has been nearly $5.5 billion in BTC acquired through financial products like ETFs in the month as well. But the point is the price of BTC moves quickly when there is a sustained bid in the market, as we've seen so far in the month of May. Given that, my view is that if/when TMTG goes forward with BTC purchases, it would figure to put an end to any hopes and dreams for a larger US government-driven acquisition plan through a 'Strategic Bitcoin Reserve,' or SBR. Through a trust managed by his son, President Trump owns roughly half of the outstanding shares of DJT stock prior to the $2.5 billion PIPE. So when Bitcoin's price rises, it would directly benefit President Trump's net worth. Meaning, any BTC purchases either through the SBR or through a more formal Bitcoin Bill in the United States would be optically horrific for both the President and the GOP. Thus, should TMTG ultimately acquire $2.5 billion in BTC, I expect it would be politically dubious for the Trump administration or Congress to subsequently approve government-purchased BTC as well due to the impact it would have on DJT shares. Simply put, to avoid the 'pumping Trump's bags' with taxpayer money narrative, I don't see a politically acceptable path for the current admin or current Congress to pass the kind of Bitcoin Bill that is being proposed by people like Senator Cynthia Lummis. The negative campaign ads would write themselves. Further complicating any possible BTC holdings growth through the SBR is the fact that the US Strategic Bitcoin Reserve currently only holds funds that have been seized due to illicit activities. While the administration has committed to not liquidating those funds, the March executive order laying out guidelines for the SBR stated BTC could be purchased through a budget-neutral allocation strategy. Again, this would seem to be nearly impossible to pull off politically, given that the budget bill recently passed by the US House of Representatives appears to grow the deficit through an increase in spending prior to a reported appropriations bill that may be forthcoming. Closing Summary As of article submission/publication, the Bitcoin 2025 conference is ongoing in Nashville, Tennessee. Vice President JD Vance was a Day 2 speaker at that event and called Bitcoin a "strategically important asset for the United States over the next decade" as well as a "hedge against bad policy making" in Washington. Neither of those assertions should give Bitcoin advocates a lot of confidence that building the SBR is a top priority for the administration currently. First, President Trump will be out of office in less than a decade. So if there is to be any large-scale purchase plan for the asset with a decade in mind, that plan likely needs to be implemented fairly soon. Second, the current administration has an impact on policy in Washington. I would have to imagine the executive branch believes it can influence good policy rather than bad. Thus, negating the need for a hedge on said policy. And as I laid out in the article, even if the POTUS were to encourage rapid SBR growth through purchases in the market, the optics of doing so when the President's majority-owned company owns $2.5 billion in BTC would be a political nightmare for both the President and the Republican Party. None of this means Bitcoin is a 'sell' today. But if you've been buying BTC thinking the United States federal government would start gobbling up coins at any price, I think TMTG buying Bitcoin has likely killed any hope of that actually happening.
