Will You Make Money From Investing in Trump’s Stock If He Wins the Election?
Trump Media & Technology Group is the publicly traded company that owns Truth Social, a social media platform founded by former President Donald Trump in Feb. 2022. Trump Media & Technology Group went public with the ticker symbol DJT in late March via merger with a special purpose acquisition company named Digital World Acquisition Corporation.
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Shares of DJT immediately soared 41% on the day it went public and were even stopped for trading at one point due to extreme volatility. However, shares have plummeted since then and erased all of the initial gains.
Still, with the presidential election less than seven months away, many investors are wondering if this a good time to pick up shares of a social media company attached to one of the candidates. So, here’s a look at exactly what Trump Media &Technology Group is, how the company is performing, and whether or not experts view it as a viable investment option.
What Is Trump Media and Technology Group?
Any way you look at it, the Trump Media & Technology Group is inextricably linked to politics. The company is the publicly traded face of Truth Social, the social media company created as an outlet for Trump after Facebook and X (formerly Twitter) restricted his accounts in the wake of the Jan. 6 attacks on the Capitol, according to the Associated Press.
The platform mainly serves as a platform for various right-wing pundits, including Trump, to express their views. The ex-president currently owns roughly 57% of the shares in Truth Social, giving him a majority stake.
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How Is DJT Performing?
Trump Media & Technology Group has been nothing but volatile in its short trading history. After soaring 41% immediately after it began trading, the stock has been on a roller coaster. As of Apr. 8, 2024, the stock was at $36, down significantly from its high of $66 on Mar. 27.
Part of the reason for the volatility is no doubt the fact that the company has yet to turn a profit and its financial metrics are a bit hard to pin down. What is known is that Trump Media & Technology Group lost $58.2 million in 2023, against just $4.1 million in revenue. Even worse, the company’s own auditor warned that these losses raise “substantial concern” about the company’s ability to continue as a going concern.
Although the company’s CEO Devin Nunes said in a press release that the company has no debt and $200 million in the bank, he also acknowledged that the company expects to operate at a loss for the foreseeable future — and it would be premature to predict if and when it might become profitable.
Another reason is the large amount of shares that are sold short. When investors sell short, it means they borrow shares of stock and sell them immediately, hoping to buy them back at a lower price and pocket the difference. Approximately 12% of all Trump Media & Technology Group shares are currently sold short, which is a very high number. This contributes to the volatility in the stock.
Will DJT Stock Get a Bump If Trump Wins?
As the Truth Social parent company is intimately tied to Donald J. Trump — as evidenced by its stock symbol — it’s possible that emotional investors will give the stock a boost in the event the former president wins a second term. However, how any stock will trade on a given day — particularly a volatile, politically connected stock with no earnings — is pure speculation.
One of Wall Street’s most famous expressions is “buy on the rumor, sell on the news,” so it’s also possible that the stock runs up in anticipation of a Trump victory and then sells off afterwards. The bottom line is that playing DJT based on the results of the election could be tricky at best.
What Do Experts Say About DJT’s Long-Term Outlook?
Unfortunately, there are currently no Wall Street analyst ratings on DJT stock, most likely due to its recent listing. Before the presidential election in November, however, you’ll likely see a number of analyst projections about how the future looks for DJT.
In the meantime, some financial reviewers, like John S. Tobey at Forbes, believe that the worst has only begun for DJT. According to Tobey, investors are just now learning about the weak financial position of the company, and this news may contribute to further selling. Combined with the large number of short sellers of the stock and the fact that the overall track record of SPAC mergers is poor, there could be further selling ahead.
Should You Buy Trump Media & Technology Group Stock?
Trump Media & Technology may very well turn out to be a long-term winner, or even a profitable trade. Understand, however, that it will likely remain volatile thanks to a number of factors. These range from its status as a money-losing company to uncertainty regarding its future profitability, aggressive short sellers betting against the stock, and a lack of analyst coverage.
A Trump victory in November may give the stock a lift — although that’s far from a certainty — but whether or not it can compete over the long run remains a guessing game. Therefore, invest at your own risk.
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This article originally appeared on GOBankingRates.com: Will You Make Money From Investing in Trump’s Stock If He Wins the Election?
