Trump’s social media stock rises as the US heads to the polls

New York
CNN
—

Former President Donald Trump’s social media company is surging on Election Day as it faces a potential make-or-break moment that will be decided by voters.

Shares of Truth Social owner Trump Media & Technology Group rose 13% Tuesday morning.

The rally builds on a 12% gain on Monday and represents a rebound from three days of steep losses last week.

Traders have been betting for months that a Trump victory could boost the value of Truth Social — though it would be very difficult to justify its current price tag even with Trump back in the White House.

Trump Media is losing money and generating very little revenue. Its main product, the conservative social network Truth Social, remains small. Yet Trump Media has turned into a multi-billion dollar meme stock and a favorite way for traders to bet on how this election campaign will end, inflating the net worth of the largest shareholder along the way.

Some other elements of the so-called Trump Trade also rose on Tuesday. Major bank stocks and bitcoin rose. So did private prison companies Geo Group and CoreCivic. Prediction markets has also shifted in Trump’s direction.

Still, the final polls and prominence election models suggests that the race for the White House is a true coin flip that could go either way.

“I don’t know where the market gets its confidence from,” said Steve Sosnick, chief strategist at Interactive Brokers. “I think those who have favored the former president all along are a confident bunch, and this is their last opportunity to express that confidence before we find out if it’s justified.”

Matthew Tuttle, CEO of Tuttle Capital Management, told CNN on Tuesday that it is far too early to draw any conclusions from the Trump Media surge and other market moves.

“It’s extremely early. I don’t think we’re seeing smart money here. We’re seeing people throwing darts at a board,” Tuttle said.

Trump Media, which trades under the ticker symbol “DJT,” has a lot on the line.

Although Trump Media generated just $1.6 million in revenue this year, it is valued at nearly $8 billion based on Tuesday’s gains. That means Trump Media’s market capitalization is roughly equal to Paramount Global, a media conglomerate that owns CBS and has brought in more than $14 billion this year.

If Trump loses the election, Trump Media has little to fall back on. Venture capitalist Gene Munster recently told CNN that a Trump loss could send Trump Media’s value plummeting to just $1 billion. Others believe it could be worth even less.

“I wouldn’t touch DJT because I think the downside is zero and I’m not sure how much upside there is,” Tuttle said.

Trump owns 114.75 million shares in the company, making him the dominant shareholder. At current prices, these shares are worth about $4.5 billion. That’s up sharply from $1.4 billion on Sept. 23, when Trump Media closed at a record low.