Trump Media & Technology Group stock (DJT) continued its steep decline on Thursday, reversing earlier gains from the week with shares closing nearly 12% lower. Trading was briefly halted due to significant volatility in the stock.
The sharp fluctuations follow the stock’s most substantial drop on Wednesday, when shares fell approximately 22%. Since Tuesday, the company’s market capitalization has contracted by more than $3 billion, though DJT remains about 130% higher than its September lows. As the election approaches, this volatility is expected to persist. One investor cautioned that a loss for Trump in next week’s election could drive the stock down to zero.
“It’s a binary bet on the election,” said Matthew Tuttle, CEO of Tuttle Capital Management, during an appearance on Yahoo Finance’s Catalysts show. Tuttle, who holds put options on the stock, indicated that the stock’s movement reflects a “buy the rumor, sell the fact” trading strategy.
“I would imagine that the day after him winning, you’d see this come down,” he speculated. “If he loses, I think it goes to zero.”
In a conversation with Yahoo Finance on Wednesday, Steve Sosnick, chief strategist at Interactive Brokers, remarked that DJT has taken on a meme-stock-like volatility, observing that “volatility works in both directions.” He noted, “It was volatile on the way up, and when a stock is that volatile in one direction, it has a tendency to be that volatile in the other direction.”
Before this week’s sell-off, the stock had seen gains as both domestic and international betting markets shifted in favor of a Trump victory. Prediction platforms like Polymarket, PredictIt, and Kalshi indicated stronger chances for Trump over his Democratic rival, current Vice President Kamala Harris. However, national polls show a highly competitive race, with key battleground states such as Pennsylvania, Michigan, and Wisconsin exhibiting razor-thin margins.
In September, DJT’s stock reached its lowest point since the company’s debut following the end of its highly publicized lockup period. Shares faced pressure after previous polling indicated Harris had a wider lead over Trump.
Trump founded Truth Social after being banned from major social media platforms like Facebook (META) and Twitter (now X) following the January 6, 2021, Capitol riots. He returned to X in mid-August after a year-long hiatus from these platforms.
As Truth Social seeks to compete with established social media giants, the company’s fundamentals have raised concerns. In August, DJT reported a net loss of $16.4 million for the second quarter, with about half of that attributed to expenses linked to its SPAC deal. Revenue for the quarter ending June 30 was just under $837,000, reflecting a 30% decline year-over-year. Additionally, the company announced earlier this month that its COO had resigned in September.
Trump retains approximately a 60% stake in DJT, and with the stock trading around $35 per share, the company has a market capitalization of about $7 billion. This valuation translates to a stake worth approximately $4.2 billion for the former president.
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