Trump’s Social Media Stock Plummets After Debate
Wall Street responded swiftly and negatively to former President Donald Trump’s performance in the ABC presidential debate on Tuesday night. The immediate aftermath saw a significant decline in share prices for Trump’s Social Media Stock – Trump Media & Technology Group (TMTG), the company behind Truth Social. Investors’ reactions were indicative of their perception of Trump’s debate showing, which was widely criticised.
TMTG Hits Record Low
On Wednesday, shares of TMTG plummeted by 17% at one point, closing the day with a 10% drop, marking the stock’s lowest level since the company went public in March. This comes as a stark contrast to the initial spike of 10% in Trump Media’s shares following President Joe Biden’s lacklustre debate performance on June 28. The sharp selloff reflects a market consensus that Vice President Kamala Harris outperformed Trump during the debate.
The ripple effect of Trump’s debate performance extended beyond TMTG. Other assets associated with Trump, including bitcoin and Coinbase, saw declines, while bonds and Asian currencies experienced gains. Clean energy stocks, such as those in solar power, also enjoyed a rise, suggesting a shift in investor sentiment towards sectors perceived as less volatile.
Analysts Weigh In
Matthew Tuttle, CEO of Tuttle Capital Management, noted that market movements post-debate highlighted a shift in betting markets towards Harris. “The perception in the market is she won the debate,” Tuttle said. This sentiment was echoed by Michael Block, Chief Strategy Officer at AgentSmyth, who remarked that TMTG’s lack of traditional earnings metrics made it a “story stock,” driven by the narrative surrounding Trump’s political fortunes.
Trump’s influence over Trump Media can’t be overstated. He is not only the company’s majority shareholder but also its most prominent user on Truth Social. The company’s stock ticker symbol, “DJT,” reflects this close association. Market analysts suggest that if Trump were to lose the upcoming election, it could severely impact TMTG, potentially driving it down to $1 per share.
Upcoming Lock-Up Expiration
Adding to the uncertainty is the imminent expiration of lock-up restrictions that currently prevent Trump from selling his 114.75 million shares in TMTG. Once these restrictions lift later this month, Trump will have the freedom to sell his shares. However, experts caution that a rapid sell-off could further tank the share price.
Trump Media’s trajectory has been tumultuous. The stock has lost approximately half its value since July, when Biden exited the presidential race. Despite a brief rally earlier this week, the broader picture remains grim, with the stock down 75% from its peak in March. The value of Trump’s stake has similarly nosedived, from $6.2 billion in May to around $1.9 billion now.
Investor Sentiment
Investing in Trump Media is often seen as a bet on Trump’s political success. The company’s fortunes are closely tied to Trump’s popularity, as highlighted by its recent market performance. Block pointed out that the Wednesday selloff was likely driven by investors’ reactions to Trump’s debate performance, reflecting broader concerns about his electoral prospects.
Trump Media’s struggle extends beyond its stock performance. The company’s future is intertwined with Trump’s political career, making it a volatile investment. The fluctuating stock prices underscore the political nature of TMTG’s market valuation, influenced heavily by Trump’s public appearances and performance in the political arena.
Political Reactions
Political commentators from both sides of the spectrum agreed that Harris appeared more composed and articulate during the debate. Her team’s confidence was evident as they challenged Trump to another debate. Trump’s response was dismissive, repeating his claim on Truth Social that Harris only wanted a rematch because she was “beaten badly.”
With the lock-up lifting and the 2024 presidential race heating up, the coming months will be critical for Trump Media. Investors will be closely watching Trump’s political moves and their impact on TMTG’s stock. The company’s reliance on Trump’s popularity makes it a unique entity in the stock market, one whose future is as uncertain as the political landscape it is tied to.
Source
Explore more entrepreneurial insights and success stories at Inspirepreneur, your go-to magazine for business innovation and leadership.
