Donald Trump Media shares suspended following sharp selloff

Ahead of election night, former President Donald Trump's media company stock was halted amid a sudden and steep selloff Tuesday afternoon, News.Az reports citing Newsweek .

Stock for Trump Media & Technology Group Corp. stood at $34.35 per share Tuesday afternoon after falling 15 percent in roughly 15 minutes. Trump Media & Technology, which operates Trump's Truth Social media platform, rose significantly earlier in the day as voters began to cast their ballots across the country.

But the volatility the stock is experiencing saw shares rise 14 percent to $39.12 and then back down to $34.35 rapidly. While the stock could reflect Trump's odds at winning the election, it also could be a way for investors to get in on a stock during a volatile time when shares drop suddenly before climbing their way back up.

"The initial rise was speculative, driven by hopes of a Trump victory," Kevin Thompson, a finance expert and founder and CEO of 9i Capital Group, told Newsweek. "Many traders are capitalizing on the sentiment of MAGA supporters, buying in early and selling off by the close. Options data shows high implied volatility, suggesting the stock could dip to around $20 if Trump loses."

In recent months, Trump Media has reported less-than-stellar financial results. Its second-quarter revenue saw 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 unjustifiable based on user metrics," SeekingAlpha analyst Bohdan Kucheriavyi wrote previously.

"Despite poor performance, Trump Media's stock has surged due to political events, highlighting its sensitivity to election outcomes rather than business fundamentals. The stock's fate hinges on the 2024 presidential election results, with potential appreciation if Trump wins, but a bleak outlook if Kamala Harris prevails."

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

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

"Trump Media's stock has surged 200 percent this past month, tracking election polls that show Donald Trump narrowing his lead gap with Kamala Harris," wrote Uttam Dey, another SeeingAlpha analyst. "The stock is treated like a meme stock, fluctuating with election sentiment rather than real financial metrics, making it a high-risk bet for investors."

It's unlikely America will learn who wins the election Tuesday night, but Trump Media & Technology is likely to continue to fluctuate based on public perception of who's winnings.

"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 might see a market bump if Trump wins, or a minor selloff if Harris wins."

On Monday, DJT stock jumped 12 percent, following a period of declines at the end of the last week. The stock dropped 22 percent last Wednesday, then 12 percent on Thursday and another 14 percent on Friday.

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

"Looking at today's performance of stocks associated with the Trump campaign, it's fair to say investors are bullish on his chances of winning the election," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.

"...This same trend happened in reverse in 2016, when many investors anticipated a Clinton presidential victory and were blindsided the next day. It's important to not view the stock market like sports betting. Yes, a new administration can bring plenty of positives to different market sectors, but the reality is over the last eight years, we've had both Republican and Democratic presidents, and the market as a whole has mostly surged in all sectors."

News.Az