The Trump Media & Technology Group has been on a rollercoaster ride in the stock market this month. The stock, which trades under the ticker DJT, saw a massive increase in price just days before, only to plummet as much as 39% since its intraday high on Tuesday. This two-day decline has resulted in former President Donald Trump losing over $2.4 billion from his stake in the business.
Trump Media, the company behind the Truth Social app, saw its stock drop by $5.35, or 13.4%, to $34.68 in early afternoon trading on Thursday. This came after the stock hit an intraday low of $33.41. The decline followed a 22% drop on Wednesday, which came after more than five weeks of market gains that pushed the shares to a Tuesday intraday high of $54.68.
The volatility of DJT shares has led to comparisons with meme stocks, which are companies that trade based on social media buzz rather than traditional financial metrics like revenue growth or profitability. Despite Truth Social’s declining revenue and significant losses, Trump Media shares surged in October as polls in the presidential race tightened and betting markets predicted favorable odds for Trump to win.
The exact reason for the two-day sell-off is unclear, but DJT shares have attracted speculators and short sellers. Some of the surge in DJT shares in October may have come from short sellers being forced to cover their bets, leading to a short squeeze that drives the stock price higher.
S3 Partners, a research group, highlighted the squeeze risk for DJT stock due to its limited float and high short interest. With Trump holding a 57% stake in the company and short sellers facing losses, the potential for a short squeeze remains high.
Trump’s stake in DJT stands at around 115 million shares, making him the largest investor in the company. At the stock’s recent peak of $54.68, his stake was valued at almost $6.3 billion. However, the two-day sell-off has reduced the value of his stake to about $3.8 billion based on Thursday’s intraday low.
Despite the paper losses, Trump has stated that he has no intention of selling his shares after a lock-up period expired last month. Selling even a portion of his stake could flood the market with available shares and drive down the stock price. Many other DJT shareholders are small investors who bought shares to show support for the former president.
As the stock continued to tumble for a second day, some shareholders expressed their frustration and vowed revenge in the future. Some blamed short sellers, while others pointed fingers at the U.S. Securities and Exchange Commission (SEC). One shareholder, Chad Nedohin, a minister and leader of a DJT group on Truth Social, expressed his commitment to Trump and his willingness to withstand any financial challenges.
The future of Trump Media & Technology Group remains uncertain as the stock continues to experience significant volatility. Shareholders, both big and small, are closely watching the developments and hoping for a turnaround in the company’s fortunes. The influence of social media, speculation, and political events on stock prices highlights the complexities of the modern stock market and the challenges faced by companies like Trump Media.
