Donald Trump’s media stocks stalled amid sudden and steep selloff

Ahead of election night, former President Donald Trump’s stock in the media company was halted amid a sudden and steep sell-off on Tuesday afternoon.

Stock for Trump Media & Technology Group Corp. stood at $34.35 a share Tuesday afternoon after falling 15 percent in about 15 minutes. Trump Media & Technology, which operates Trump’s Truth Social Media platform, rose sharply earlier in the day as voters began casting their ballots across the country.

But the volatility the stock is experiencing saw shares rise 14 percent to $39.12 and then quickly back to $34.35. While the stock could reflect Trump’s odds of winning the election, it could also be a way for investors to get into a stock during a volatile time when stocks suddenly fall before climbing back up.

“The initial spike was speculative, driven by hopes of a Trump victory,” said Kevin Thompson, financial expert and founder and CEO of 9i Capital Group. Newsweek. “Many traders are taking advantage of the sentiment of MAGA supporters, buying in early and selling out at the close. Options data shows high implied volatility, suggesting the stock could fall to around $20 if Trump loses.”

In recent months, Trump Media has reported less than stellar financial results. Its second-quarter revenue had less than $1 million in sales despite its $7 billion market cap.

“Trump Media’s declining revenues and lack of profitability make it a risky investment, with its current market cap indefensible based on user metrics,” SeekingAlpha analyst Bohdan Kucheriavyi previously wrote.

“Despite poor results, Trump Media’s stock has rallied on political events, highlighting its sensitivity to election results rather than business fundamentals. The stock’s fate hinges on the results of the 2024 presidential election, with a potential upside if Trump wins, but a bleak outlook , if Kamala Harris wins.”

Ahead of the election, polls revealed a close race between Trump and Vice President Kamala Harris.

Analysts have warned investors against taking a stake in what is considered by many to be a high-risk stock.

“Trump Media’s stock is up 200 percent in the past month, tracking polls showing Donald Trump narrowing his lead with Kamala Harris,” wrote Uttam Dey, another SeeingAlpha analyst. “The stock is treated as a meme stock that fluctuates with election sentiment rather than real financial metrics, making it a high-risk bet for investors.”

The US is unlikely to know who will win the election on Tuesday night, but Trump Media & Technology will likely continue to fluctuate based on the public’s perception of who will win.

“This trading activity reflects less about election predictions and more about event-driven volatility,” Thompson said. “Supporters may be bidding up the stock on hopes of a Trump win, but overall this is standard volatility around a major event. We may see a market bump if Trump wins or a minor selloff if Harris wins.”

On Monday, DJT shares rose 12 percent after a period of decline at the end of last week. The stock fell 22 percent last Wednesday, then 12 percent Thursday and another 14 percent Friday.

Trump currently owns 114.75 million shares in Trump Media as the company’s largest shareholder. That puts the value of his stock at around $4.5 billion.

“Looking at today’s results for stocks associated with the Trump campaign, it’s fair to say that investors are positive about his chances of winning the election,” said Alex Beene, a finance lecturer at the University of Tennessee in Martin, Newsweek.

“…The same trend happened in reverse in 2016, when many investors predicted a Clinton presidential victory and were blindsided the next day. It’s important not to view the stock market as sports betting. Yes, a new administration can bring a lot of positives. to different market sectors, but the reality is that over the last eight years we’ve had both Republican and Democratic presidents, and the market as a whole is mostly up in all sectors.”

Update 11/5/24, 3:58 PM ET: This story was updated with comment from Kevin Thompson and Alex Beene.