As a Foolish investor, I’m always on the lookout for companies that can provide long-term value. But sometimes, even the soaring ones are best left alone. Example: Trump Media and Technology (NASDAQ: DJT), which is up 31% since the beginning of 2024. Despite that impressive growth, I wouldn’t go near this company with a pole. Here’s why.

Limited potential

First, let’s talk about what the company actually does. It works Social trutha social media platform launched by former US President Donald Trump. While it has gained attention for its famed founder, the business fundamentals are, let’s say, far from perfect.

It’s challenging not to wince when you look at the numbers. In its latest earnings report, the company reported revenue of just $3.43 million. That’s a million with an “m,” people. And yet, somehow, this company has a market cap of more than $4 billion!

But wait, it gets worse. That meager revenue was matched by a net loss of $379 million. You read that right — the company is losing more than 100 times what it brings in. That’s not the kind of math that excites me as an investor.

Now, you might be thinking, “But this is a growth stock! I mean, it’s all about the future potential!” Well, when it comes down to it… The company’s revenue is down 9.2% over the past year. That’s not the kind of trajectory I’d like to see in a supposed growth story.

Let’s not forget about volatility. With a beta of 5.98, six times more volatile than the market, this company is about as stable as a house of cards in an earthquake. The stock swings wildly, which can be amusing for day traders, but is enough to make long-term investors like me seriously dizzy.

There’s also the miniature matter of insider selling. The company recently had to buy back shares from executives to cover a hefty tax bill. While the details are a bit murky (never a good sign), it’s clear that some insiders are headed for exits.

Future

Looking ahead, there are storm clouds on the horizon. September will see a major “unlock” event when a immense number of shares become available for trading. This could lead to significant selling pressure and potentially push the share price lower.

And let’s not forget the bigger picture. The company is embroiled in multiple lawsuits, many of them involving the same people who helped bring it to market. That’s not a recipe for velvety sailing.

I’m not here to pass political judgment. But as an investor, I look for solid companies with sturdy fundamentals and clear paths to profitability. Trump Media & Technology, despite its attention-grabbing nature, falls tiny of my expectations on all counts.

Not for me

So while the stock could be up 31% this year, I’ll stay away. There are plenty of other fish in the sea—ones with real revenue, growing user bases, and viable business models. As for me, I’ll stick to companies that don’t make me feel like I need a stiff drink every time I check the financials.

Remember, fools, that just because a stock is going up doesn’t mean it’s a good investment. Sometimes it’s best to just sit back and watch.