Trump Media, the parent company of Truth Social, published an encouraging third-quarter earnings report on Monday, revealing its first-ever profitable quarter. The stock rose slightly in extended trading, with DJT climbing to $4.20, though it remains well below its all-time high as concerns about the company's core business persist.

Profit Driven by Digital Assets, Not Core Operations

In a statement, the company said it posted a net income of $409.7 million in the third quarter, its biggest figure on record. The result, however, did not come from an improvement in the underlying business. Instead, the surge reflected changes in the value of the company's digital assets, led by its Bitcoin holdings.

Trump Media currently holds 12,062 coins, making it the tenth-largest corporate Bitcoin holder in the world. Its holdings exceed those of companies including Tesla, Block, and Galaxy Digital, placing it among a small group of publicly traded firms that hold Bitcoin directly on their balance sheets. Bitcoin performed well during the third quarter, jumping from below $58,000 to a peak of $87,300. Under mark-to-market accounting, the company is required to update both the realized and unrealized values of its assets each period, which channels movements in its digital asset portfolio directly into reported results. That same mechanism means quarterly earnings can swing in either direction with Bitcoin's price, regardless of how the core business performs.

Adjusted EBITDA, a measure commonly used to track operating performance, registered a loss of $12.3 million, an improvement from the $29 million loss recorded in the same period last year.

Revenue Surges From a Small Base

Revenue also climbed sharply. Quarterly revenue jumped to $3 million, an increase of 205% from the same period last year. Most of the growth was driven by subscription services, including the Trump API, a solution that gives customers early access to posts from prominent figures such as President Trump. The company's Truth+ service also contributed, generating more than $200,000 in revenue. Even with that growth, revenue remained small relative to the quarter's $12.3 million adjusted EBITDA loss.

The report further showed that Trump Media ended the quarter with $2.5 billion in assets, the majority of which are in the form of digital assets, most notably its Bitcoin holdings.

Trump Media Faces Potential Risks Ahead

Despite the record profit, the company faces several major risks. One of the primary concerns is that its profits are unrealized, meaning they exist on paper and would only convert to cash if the holdings were sold, leaving them exposed should Bitcoin continue to fall. Indeed, data shows that Bitcoin has dropped into a technical correction after falling more than 14% from its highest point in October this year. As a result, the value of the company's Bitcoin holdings is declining, which may translate into a loss in the fourth quarter if the trend continues. The upcoming fourth-quarter report will therefore show whether the record profit holds up or reverses.

A second key risk is that Truth Social's traffic is falling, a development that could weigh on its core revenue over time. According to SimilarWeb data, the website's traffic stood at 11.8 million in October, down more than 22.9% from the previous month. The decline is notable given that traffic would ordinarily have been expected to strengthen around the midterm elections. Future monthly traffic readings will indicate whether the drop is temporary or part of a sustained slide.

Politics presents a further risk: the company could face investigations when Democrats take charge of the House and the Senate next year. One of the key issues expected to draw scrutiny is Truth+, which they claim is illegal.

DJT Stock Price Technical Analysis

The daily chart shows that the DJT share price has been in a steep sell-off and is now hovering at a record low. The stock has moved below the important support level of $6.84, its lowest level in June and July. It has also remained below all of its moving averages, a sign that bears are in control.

As a result, the shares may continue falling in the near term. Should that occur, the next level to watch will be at $3.50. On the other hand, a move above the $5 resistance level would invalidate the bearish outlook.

This article provides market information, not investment advice. Stocks and cryptocurrencies carry market, liquidity and operational risks. Readers should conduct independent research and consult qualified financial professionals before making investment decisions.

This article first appeared on The Market Periodical.