In recent months, shares of Trump Media & Technology Group have been on a steady decline, hitting new lows and leaving investors feeling bearish about the once high-flying stock. The downward trend may not be over yet, as the expiration of lockup agreements this month could potentially lead to insider sell-offs, further impacting the stock's performance.

Former President Donald Trump holds the majority ownership of Trump Media, and currently, a lockup agreement prohibits him and other insiders from selling their shares. However, with the expiration of these agreements anticipated as early as September 20, there is speculation that Trump may consider cashing out a significant portion of his stake in the company. This potential move has prompted investors to sell their shares ahead of time, fearing a potential market downturn.

As Trump remains the face of the company, any sale of his shares could be interpreted as a lack of confidence in the stock by investors. Insider transactions often indicate the sentiment within a company, and the more shares Trump sells, the more pessimistically investors may view the news.

However, beyond the expiration of lockup agreements, the struggles for Trump Media could continue due to its resemblance to a meme stock rather than a solid long-term investment. The company's revenue generation is minimal, amounting to just $0.8 million in the second quarter. Additionally, Trump Media does not provide detailed metrics on its user count, raising concerns about the platform's growth potential.

While Trump Media states its focus is on enhancing features and user interface rather than traditional performance metrics, such as average revenue per user and active user accounts, the absence of such reporting raises doubts about the platform's growth trajectory. In comparison to other social media giants like Meta Platforms-owned Facebook, WhatsApp, and Instagram, Truth Social's user base is expected to be significantly smaller, potentially around 5 million active users.

Truth Social's financials also paint a grim picture, with an operating loss of $117 million in the first half of the year and a significant amount of cash being used for day-to-day operations. Despite still having $344 million in cash and cash equivalents, Trump Media's financial situation could deteriorate further as it increases spending on growth initiatives, including the upcoming launch of its TV streaming platform.

With a lackluster user base and uncertain profitability, the outlook for Trump Media stock appears challenging. The absence of a robust business to invest in and the potential for further declines indicate that the stock's free fall may be far from over.

It is important to note that Randi Zuckerberg, a former director of market development and spokesperson for Facebook, and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool has positions in and recommends Meta Platforms.

Disclaimer: The contents of this article are for informational purposes only and do not constitute financial advice. Readers should consult with a licensed financial professional before making any investment decisions.