Trump’s Social Media Empire Takes a Hit
The meteoric rise of Trump Media & Technology Group, the company behind Donald Trump’s right-wing social media platform Truth Social, has come to a screeching halt. Shares plummeted a staggering 15% at market open on Thursday, prompting two trading halts within the first hour due to extreme volatility.
Market Whiplash
Over the past 48 hours, Trump Media has shed billions in market value, erasing weeks of gains. The company’s stock closed down a whopping 22% on Wednesday, its worst day since debuting on the Nasdaq in late March. As of Thursday morning, Trump Media’s market capitalization stood at $6.90 billion.
Ties to Trump
Despite the recent downturn, shares of Trump Media are still up 116% this month, thanks to a frenzied rally in recent weeks. However, much of the trading activity surrounding DJT stock is driven by sentiment rather than actual business performance. According to John Rekenthaler, vice president of research at Morningstar, Trump Media is an “affinity stock,” meaning its value is heavily influenced by Trump’s popularity and election prospects.
Election Fever
With the U.S. presidential election just around the corner, Trump Media stock has become a way for Trump supporters to express their enthusiasm financially. Trump himself holds a 57% stake in the company and has stated he has no plans to sell, despite the end of a six-month share lock-up agreement last month. This bodes well for the company’s future prospects.
Risks and Uncertainties
Trump Media has acknowledged in regulatory filings that its success is heavily dependent on Trump’s popularity and reputation. Adverse publicity or a loss of Trump’s services could severely impact the company’s revenues and operations. Rekenthaler warns that if Trump loses the election, Trump Media stock could plummet to zero. On the other hand, if Trump wins, the stock’s potential is limitless.
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