Election Day Jitters Send Trump Media & Technology Group Stock into a Tailspin
As the US presidential election reaches its climax, investors are bracing for a wild ride with Trump Media & Technology Group’s stock (DJT) experiencing unprecedented volatility. On Tuesday, the stock was briefly halted due to extreme price fluctuations, erasing 15% gains and reversing Monday’s double-digit percentage rise.
A Binary Bet on the Election
The company’s market cap took a massive hit, shedding around $4 billion last week, with shares plummeting over 20% to close out the five-day period on Friday. Despite this, the stock has still more than doubled from its September lows. The latest price action is largely attributed to the uncertainty surrounding the presidential election between Republican nominee Donald Trump and Democratic candidate Kamala Harris.
Volatility Expected to Continue
Investors are anxiously awaiting the election results, with many predicting continued volatility in the stock. Matthew Tuttle, CEO of investment fund Tuttle Capital Management, warned that if Trump loses the election, shares of DJT could plummet to $0. “It’s a binary bet on the election,” he stated, emphasizing the stock’s trajectory hinges on a “buy the rumor, sell the fact” trading strategy.
A Meme-Stock in the Making?
Interactive Brokers’ chief strategist Steve Sosnick believes DJT has taken on a life of its own, mirroring the characteristics of a meme stock. “When a stock is that volatile in one direction, it has a tendency to be that volatile in the other direction,” he noted.
Truth Social’s Uncertain Future
Prior to the recent volatility, shares in the company, which owns Trump’s social media platform Truth Social, had been steadily rising as both domestic and overseas betting markets shifted in favor of a Trump victory. However, with the latest polling showing Harris surpassing Trump in key battleground states, the lead has narrowed significantly.
Fundamental Concerns
Trump founded Truth Social after being kicked off major social media apps following the Jan. 6, 2021, Capitol riots. Despite his reinstatement on those platforms, the fundamentals of the company have long been in question. In August, DJT reported a net loss of $16.4 million, with revenue of just under $837,000 for the quarter ending June 30, a 30% year-over-year drop.
A Personal Stake
Trump maintains a roughly 60% interest in DJT, giving him a stake worth around $4.1 billion at current levels of around $35 a share. As the election results unfold, investors will be closely watching how Trump Media & Technology Group’s stock reacts to the outcome. One thing is certain – the road ahead will be filled with uncertainty and volatility.
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