Donald Trump’s Truth Social made a rip-roaring start to life as a publicly traded company under the name The Trump Media & Technology Group yesterday.

The stock traded as high as $79.38, valuing it at around $10bn. It closed the day at $58.

It is being likened to a meme stock in as far as fanatic Trump supporters are clubbing together to buy the stock out of their love for Trump as opposed to the prospect of shareholder returns.

The fundamental argument for shorting The Trump Media & Technology Group is compelling. The company only generated $3.3m in revenue in the first nine months of 2023 and lost $50m.

Last night’s closing price gives Trump’s social media company a price-to-sales ratio of around 2,400x. This is eye-wateringly high compared to another recent social media listing, Reddit.

As Hargreaves Lansdown’s Susannah Streeter details below, there is a monumental disparity between the two in terms of valuation on both an earnings basis and per user.

“There is likely to be significant volatility ahead as a share buying frenzy among his supporters may wane, and investors dig deeper into the fundamentals. Truth Social now has a market cap of just shy of $8 billion with around 5 million active web and mobile users,” Streeter said.

“By contrast Reddit, which went public last week now has a market cap of $10.3 billion but has 73 million active users, a number that’s steadily increased over the years. The floatation will mean $300 million can be poured into the platform, which is set to serve as a pulpit and willing audience for his electoral sermons but it’s hard to see where growth will come to justify this price tag.”

Trump is locked in for six months. One would think that as this date approaches, traders and investors would sell the stock in anticipation of Trump doing the same at his first opportunity.

But this is the United States we’re talking about. Technology stocks thrive with little attention paid to short-term earnings-based valuations. US markets have the ability to look past any short-term losses to the long-term growth story.

However, the disconnect between Truth Social’s valuation and its peers and the wider market isn’t likely to last for long as traders dive in on the opportunity to short the stocks and take it back down to a more sensible valuation.

In addition, the general operating environment for a new social media platform is challenging given the loyalty users have for existing platforms and the lack of innovation Trust Social offers.

“The site will have its work cut out to compete against more established platforms which keep attracting eyes on screen due to the network effect of already having high numbers of users,” Susannah Streeter said.

The Lloyds share price has had a good run but now poses a problem for investors as it resides around the key resistance level of 50p.

Lloyds shares have consistently failed in the 50p region over the past two years, with only a brief foray to 54p back in early 2022.

The 50p level for Lloyds is reminiscent of the Lord of the Rings scene in which the grey wizard Gandalf fights off a fire-breathing monster declaring ‘You Shall Not Pass’.

Yet, the stock has broken through the 50p mark and trades at the dizzy heights of 51.6p. From a technical perspective, the bulls will want to see a retest of the psychological 50p mark before concluding Lloyds shares can continue to trend higher.

Lloyds is entrenched in a trading range between 40p and 50p and it’s going to take an awful lot to see it break convincingly in either direction. 

The direction of Lloyds—and other UK banks—will be dictated by the wider macro environment. As both a direct facilitator and beneficiary of the UK economy, the ongoing resilience of the UK property market, inflation, and consumer strength will decide whether Lloyds will touch 60p or 40p next.

The Lloyds dividend is a huge attraction that prevents it from breaking below 40p and the lingering fears of a soft UK economy caps the Lloyds share price at 50p.

The macroeconomic picture isn’t on Lloyd’s side. Although it has navigated the cost-of-living crisis largely unscathed, its profit growth has been enhanced by the higher interest rate environment, which will end this year. 

Lloyds profits won’t fall off a cliff because rates won’t go back to near zero, but lower rates will act as a significant headwind. Ultimately, it will come down to the timing of interest rate cuts and the state of the UK economy at that point.

In reality, Lloyds has become a trader’s dream, and those inclined to seek out shorting opportunities will be licking their lips at the prospect of opening a position in the 50p region.

That said, a major break above 50p and a successful retest of that level could open up the doors to 60p.

As the Bank of England reminds us, they are data-dependent. The economic data the BoE relies on for its interest rate decisions will determine Lloyds’ share price performance and must be watched closely.

The FTSE 100 was trading almost flat in mid-afternoon trade in London as fresh concerns about US-Chinese relations hit sentiment.

Investors held back from launching an attack at the FTSE 100’s record highs above 8,000 after news broke of a Chinese cyber hacking campaign that targeted millions of US citizens. The index traded at 7,924 shortly after 2pm.

“The wait and see mood on the markets is continuing with recent exuberance fading, as investors look ahead to key consumer inflation data stateside, while they assess the implications of the latest ‘chip wars’ between the US and China,” said Susannah Streeter head of money and markets, Hargreaves Lansdown.

While the cyber attack, in isolation, has little direct economic consequence, the geopolitical implications will be a concern after China said it would not permit US chips in its government’s systems.

“Shares in a number of semi-conductor specialist Advanced Micro Devices and Intel slipped after Beijing signalled that foreign company chips would be phased out of government computers and services and replaced with home produced versions,” Streeter said.

“This latest chip skirmish isn’t not going to stop the AI juggernaut in its tracks, but it highlights one of the risks ahead for demand in the world’s second largest economy.”

Concerns about Chinese demand inevitably hit the FTSE 100 and the China-centric mining sector.

“Mining stocks were helping to clip the wings of the UK market amid growing tensions between major commodities consumer China and the West over hacking by Chinese spies,” said AJ Bell investment director Russ Mould.

Kingfisher was the FTSE 100’s top gainer as the DIY retailer continued yesterday’s rally on hopes the worst of the falling revenue is behind them.

Ocado was 2.5% higher after the company announced positive sales in its retail partnership with Marks & Spencer.

Autotrader fell 5% and was the FTSE 100’s top faller after Goldman Sachs cut its price target.

Good Energy’s profit before tax increased in 2023 as the renewable energy services company delivered on its strategy to become an end-to-end microgeneration specialist.

The 2023 full year marked a year of transformation for Good Energy, in which it transitioned to operating as an end-to-end renewable energy services business providing a one-stop shop for climate-conscientious households.

During the period, Good Energy completed the acquisition of Wessex EcoEnergy enabling them to enhance their solar installation service. The deal adds to similar acquisitions that bolster heat pump installations.

Customers can use Good Energy for energy supply, installation of heat pumps and solar panels, smart metering, and the capability to sell their energy back to the network.

The company has now installed 47,000 smart meters, meaning that around 58% of the company’s domestic customers now have them installed. 

Despite a volatile year for energy prices, Good Energy produced a 2.4% increase in revenue and increased gross margin to 17.4% helped by power purchase agreements. 

“Against a backdrop of continued volatility in the energy market, 2023 saw Good Energy undergo a transformation from pure renewable supply and Feed-in-Tariff administration to a fully-fledged clean energy services business,” said Nigel Pocklington, CEO, Good Energy Group.

“Following multiple acquisitions in the heat and solar space we can now offer customers premium services across supply, export, heat pumps, solar PV, storage and EV charging.

“Alongside this, we are now a leader in smart export for small scale solar and have trialled innovative flexibility services for businesses and consumers to shift their demand to cut their carbon further. Good Energy is establishing itself as the microgeneration specialist for the premium end of a rapidly growing market, offering everything a home or business needs to go greener, from a trusted brand with unparalleled expertise.”

The 2.4% increase in revenue reflected substantially lower wholesale prices at the start of 2023 compared to the end. Good Energy sees energy prices trending lower through 2024 leading to both lower revenue and cost of sales.

Reported profit before tax of £5.7m in 2023 compared with an underlying profit before tax of £1.4m in 2022. Good Energy recorded a one-off gain in 2022, meaning the reported profit before tax was £9.2m.

Good Energy’s balance sheet is exceptionally strong. Cash and equivalents grew to £41m in the period and total liabilities fell to £69m. Trade and other receivables also fell to culminate in £42m total equity at the end of the period.

In terms of the EV/EBITDA ratio used to assess the true value of the business, Good Energy trades at a material discount to peers.

After a substantial rally in Good Energy shares in the runup to results, investors booked profits on Tuesday sending shares lower in early trade.

Ocado Retail Ltd, the joint venture between Ocado Group plc and Marks & Spencer Group plc, has released its trading statement for the 13 weeks to 3rd March 2024.

The release was well received by investors and Ocado shares spiked higher on the open before falling back to trade 1.9% higher at the time of writing.

The company reported an 8.1% year-on-year growth in volumes, driving a 10.6% increase in Q1 Retail revenue to £645.3m.

“Sales were up and not just because of rising prices. The venture is actually seeing significant volume growth as it wins market share. This is partly because it saw less price inflation than the wider market,” said AJ Bell investment director Russ Mould.

“This positive trading comes after a long period of disappointing performance and you can understand Marks & Spencer’s frustration – when it agreed the tie-up with Ocado in 2019 it set targets which have subsequently not been met.”

Ocado Retail’s online market share, according to Nielsen, rose to 13.5% at the end of February, a 0.7% increase over the year.

The average number of orders per week grew by 8.4% compared to Q1 2023, reaching 414,000, reflecting a 6.4% increase in active customers to 1.02 million at the end of the quarter. W

While the average basket value increased by 2.1%, the basket size in terms of the number of items remained stable year-on-year.

As a premium retailer, Ocado Retail has set about tackling perceptions of value with a pricing strategy that resulted in a modest 2.2% growth in average selling price, significantly lower than the market.

“Ocado now needs to stay on this trajectory, keep narrowing their losses and winning more market share on their road to profit. With shares trading 85% lower than their 2021 record high and even 50% lower than just last July, many investors may well be putting some stock in their baskets looking at the potential upside,” said Adam Vettese analyst at investment platform eToro.