Donald Trump’s victory in the presidential election against Kamala Harris had an immediate and profound effect on the stock market, particularly for Trump Media & Technology Group (DJT), the parent company of Truth Social, his social media platform.
Shares of DJT surged dramatically, reaching an intraday increase of up to 25% in early trading on Wednesday, reflecting the market’s anticipation of the impact a Trump presidency might have on his business ventures. As the day progressed, the gains moderated to just under 10% about an hour after the market opened.
The ascent of DJT’s stock price – currently trading at $36.98 – was propelled by Trump securing the necessary 270 electoral votes after winning Wisconsin, positioning him to return to the White House as the 45th and now the 47th President of the United States.
Trump, holding approximately 60% of DJT, saw his personal stake in the company increase in value significantly. With shares hovering around $37, the market capitalization of Trump Media & Technology Group rose to about $7 billion, boosting Trump’s stake by an estimated $500 million from where it stood at the close of the previous day.
The volatility in DJT’s stock was evident even before the election results were fully in. On Tuesday, the stock experienced multiple trading halts due to its erratic movements, initially erasing a 15% gain before ending the day with a slight decline of just over 1%. This followed a volatile period for the stock, which had seen double-digit percentage changes in the previous trading sessions.
The company’s financial performance, as revealed in its third-quarter results released after the market closed on Tuesday, showed a net loss of $19.2 million, an improvement from the $26.03 million loss reported in the same quarter of the previous year. Despite this, revenue slightly decreased to $1.01 million from $1.07 million year-over-year, with a more significant 23% drop in revenue over the past nine months compared to the same period last year. These figures indicate that while operational losses were being managed better, growth in the company’s revenue has been challenging.
Trump Media & Technology Group was born out of necessity when Trump was removed from mainstream social media platforms post the January 6, 2021, Capitol riots. Truth Social became his alternative platform to communicate with his followers and maintain his presence online.
Although Trump has since been reinstated on platforms like X and Facebook, Truth Social has remained a significant asset for him, both as a communication tool and now, with the election outcome, as a lucrative investment.
The surge in DJT’s stock value post-election underscores the intertwining of political outcomes with market performance, especially for companies directly linked to high-profile figures like Trump. Investors appear to be betting on the potential for increased visibility, engagement, and possibly more favorable policies or regulatory environments for Truth Social under a Trump administration.
However, the financial viability of the company, as indicated by its recent earnings, suggests that while political fortunes might sway stock prices in the short term, the long-term success of Trump Media & Technology Group will depend on its business fundamentals, user base growth, and the broader acceptance of Truth Social in the social media ecosystem.
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