Former President Donald Trump’s social media venture took a hit on Wall Street following his widely criticised debate showing against Vice President Kamala Harris. Shares of Trump Media & Technology Group (TMTG), the parent company of Truth Social, had a roller coaster ride this week, closing at a record low since its public debut in March.
Market Reaction and Political Implications
The sharp selloff in TMTG stock, which trades under the ticker DJT, reflects investors’ immediate reaction to Tuesday night’s ABC presidential debate. Many commentators, including some within Trump’s own Republican Party, concluded that Harris successfully put the former president on the defensive and provoked him into veering off message.
Matthew Tuttle, CEO of Tuttle Capital Management, told CNN: “The perception in the market is she won the debate,” This sentiment was echoed across various betting markets, with PredictIt users pushing Harris’s chances of winning to 55% by Wednesday afternoon, while Trump’s odds fell to 48%.
The debate’s impact extended beyond TMTG, affecting other so-called “Trump trades” Bitcoin and cryptocurrency-related stocks, including Coinbase. Trump has positioned himself as the more crypto-friendly candidate in this election cycle.
TMTG’s Financial Health and User Base
TMTG, which went public in March through a merger with Digital World Acquisition Corporation, has struggled financially. The company reported a loss of $58.2 million in 2023, with only $4.1 million in revenue. While exact user numbers for Truth Social remain undisclosed, research firm Similarweb estimated 7.7 million visits to the platform in March 2024, compared to 6.1 billion for X (formerly Twitter).
Trump’s Stake and Looming Lock-up Expiration
The former president owns approximately 57% of TMTG’s stock, with his stake valued at just under $2 billion as of Wednesday’s close. This represents a significant decline from the $6.2 billion peak in May. Trump now faces a crucial decision as the lock-up period preventing him from selling shares expires on September 19.
Leo Sun from The Motley Fool, says, “TMTG’s valuations have soared to sky-high levels. It’s trading on its lofty pre-merger targets instead of its actual growth rates. The company has a slim chance for surviving the next 10 years”
Similar Posts
Historical Context and Market Trends
TMTG’s stock performance has often mirrored Trump’s political fortunes. The company’s shares rallied after President Biden’s poorly received CNN debate performance in June, initially spiking 10% before ending the day in negative territory. Since Biden’s withdrawal from the presidential race in July, TMTG stock has lost roughly half its value.
Investor Considerations and Future Outlook
With over 600,000 individual investors holding TMTG shares, many of whom are Trump supporters, the former president’s decision regarding potential share sales could have significant ramifications. If the stock price falls below $12, a provision in the lock-up agreement could extend the selling restriction to September 25.
As the 2024 election approaches, TMTG investors should brace for continued volatility. The upcoming vice presidential debate between Republican Ohio Sen. JD Vance and Democratic Minnesota Gov. Tim Walz on October 1 may provide further insight into the race’s trajectory.
In a potential blow to Trump’s campaign, pop star Taylor Swift endorsed Harris and Walz, calling the vice president “a steady-handed, gifted leader.” Trump responded by saying he “isn’t a fan” of Swift and suggesting she “might pay a price for it in the marketplace.”
As TMTG navigates its role as a business venture and a political proxy, investors and analysts will be closely watching its performance in the coming months. The company’s ability to monetize its user base and achieve profitability remains a key concern, even as its stock price continues to be heavily influenced by the broader political landscape.
