Trump Media stock has soared over the past month, rising 198%.
The recent jump came after the stock fell to an all-time low of $12.15 on September 23rd. The stock is currently trading at $36.30 per share.
Trump Media and Technology Group (TMTG) is the founder of Truth Social, an upstart social media platform founded by former President Donald Trump when he was banned from mainstream sites following the Jan. 6 attack on the U.S. Capitol. is a holding company that owns He refuses to accept that he lost the 2021 and 2020 presidential elections. The stock trades on the Nasdaq under the symbol DJT, which reflects Donald John Trump’s initials.
Despite the recent rally, TMTG’s financial performance has been lackluster. In the first half of this year, the company reported a loss of $344 million on revenue of $1.6 million. However, the stock’s momentum over the past few weeks may have attracted interest from momentum-based investors looking to cash in on that growth.
Jay Ritter, a finance professor at the University of Florida, said: “The extremely high trading volume relative to public stocks suggests that there are many traders, both individuals and institutions, who are following short-term momentum strategies.” said. “These traders contribute to volatility because when the tide turns, many traders move in the same direction. When the stock price falls, other companies sell, causing the stock price to fall. When the stock price rises, They buy and the price goes up.”
There are many colorful names for short-term momentum investors. So-called sharks actively trade in search of quick profits. Piranha represents such merchant tremors. Cheaters are high-frequency traders, and trendy cheaters follow trades even after they are initiated.
TMTG’s October trading volume was astronomical, with hundreds of millions of shares bought and sold. More than 278 million shares traded on the market last week, according to Bloomberg data. Last week, 194 million shares were traded.
Nevertheless, it is impossible to separate TMTG’s soaring stock price from President Trump’s political fortunes. Stocks often trade without regard to fundamentals related to business operations.
“The spike in DJT corresponds to the increase in the number of votes for President Donald Trump’s victory,” Ritter said.
Election polls in recent weeks have shown Vice President Kamala Harris’ narrow lead over Trump slipping away. The race currently appears to be fairly even, with some forecasts giving Trump a slight edge. On Monday, The Economist published its election forecast, giving Trump a 54% chance of winning the race. FiveThirtyEight founder Nate Silver said the race is 50-50, but he thinks Trump will win.
story continues
TMTG has been likened to a meme stock, meaning it trades for reasons that have nothing to do with business or financial metrics. Rather, they often serve as a way for people to show their political support for Trump.
In a June SEC filing, TMTG estimated it had about 620,000 shareholders, “the vast majority of whom are everyday retail investors.” George Kailas, CEO of online trading platform Prospero Eye, said the influence of a small group of zealous investors, many of whom are die-hard Trump fans, is creating an echo chamber. Because they are often active internally, they do not necessarily reflect the true health of the company. .
“They’re surrounded by Trumpers and they’re locking people out of online communities who don’t pass purity tests,” Kailash said. “And they believe that he can’t lose because they think most people agree with them.”
This article originally appeared on Fortune.com
