- Donald Trump's media company traded in its first session post-merger.
- Trump Media & Technology Group trades under the ticker DJT.
- Trump Media owns the Truth Social platform.
- Trump's stake in the company ended the day near $4.5 billion.
Trump Media & Technology Group (DJT) stock is off to another hot start on Wednesday. DJT stock has already risen 20% in the premarket to take out the $70 psychological level. Wednesday could experience yet another volatile day by the looks of it.
After shooting up above $79 early in Tuesday’s session, Trump Media fell back below $58. The company closed the session with a 16% gain, but this is somewhat surprising since DJT stock advanced as much as 59% during the session.
It was the first day that the formerly named Digital World Acquisition Corp (DWAC), the special purpose acquisition company or SPAC that merged with Trump Media, traded post-merger. The SPAC itself has traded on the NASDAQ since October 2021.
The equity market shrank conversely to DJT stock despite US Treasury yields falling across the curve. The Dow Jones was the best performer, dropping 0.08%. The S&P 500 fell 0.28%, and the NASDAQ retracted 0.42%.
Trump Media stock news
Former President Donald J. Trump, of course, founded the company, which owns conservative-oriented social media platform Truth Social. The company only had a little more than $3 million in revenue during the first three quarters of 2023, but some are betting that Trump’s persona will make Truth Social a niche contender with Mark Zuckerberg’s Facebook and Elon Musk’s X.
The merger arrives just in time for Donald Trump, who needs to come up with $454 million if his appeal in the New York civil fraud trial is unsuccessful. Trump lost his first round in court when the judge determined that Trump had illegally inflated his net worth on a number of occasions in order to receive loans from banks.
The elder Trump owns some 78 million shares of DJT stock, so his stake in Trump Media is worth more than $4.5 billion at Tuesday’s close, some ten times his nine-figure civil trial verdict.
Trump Media is still helmed by CEO Devin Nunes, the former California member of the House of Representatives who was close with Trump during the latter’s presidency.
A total of 53,482,409 shares of Trump Media stock traded hands during the Tuesday session out of a total of approximately 136 million shares. The best thing it has going for it is that Donald Trump has locked up the Republican nomination for president, so the social network and stock will likely feature in plenty of news over the next eight months through the election in early November.
Meme stocks FAQs
Meme stocks are stocks favored by retail traders – but not by professional or institutional traders – that grow popular through its backers publishing memes on social media websites to win converts. Images or GIFs are typically used to transmit some type of excitement, committment or comedy regarding investment in the stock. These stocks normally are beaten down names that appear to have an uncertain or dour future based on falling sales figures or rising losses. Interest in these names normally comes from either belief in a turnaround story or its heavy short ratio.
Online investing forums like Reddit’s r/WallStreetBets are known to be breeding grounds for meme stocks. Normally, some small group of posters begin making memes of a stock they are buying. If the argument behind it is cogent or even just funny, the memes may provoke other retail investors to jump aboard. Interestingly, the merits of a stock are normally immaterial to it becoming a popular meme stock other than it being abandoned by the wider market and thus cheap. Stocks with high short ratios are usually likely to become meme stocks, because the nature of the argument for investing in the stock is that it can be the subject of a short squeeze.
A short squeeze is when investors swiftly buy up the shares of a heavily-shorted stock. Because the stock is heavily shorted, there is a dearth of available shares to purchase. This allows smaller volumes of buying to push the stock’s price up more easily. Since the share price suddenly rises, short-sellers need to purchase the stock to close out their short positions. This rapid buying and closing of short positions produces an unusually low level of supply that causes the price of the stock to rise rapidly. This type of short squeeze was the result of the first meme stock craze regarding GameStop.
Besides GameStop – the ur-meme stock – there have been a number of other meme stocks. Two of the most popular are AMC Entertainment and Bed Bath & Beyond. AMC CEO Adam Aron used the popularity of AMC shares among the retail class to effect a secondary offering that raised enough money to stave off bankruptcy during the 2020-2021 pandemic. Bed Bath & Beyond saw a flurry of volatile trading but eventually went bankrupt in April 2023.
Trump Media stock forecast
DJT stock spiked at Tuesday's open but then spent the rest of the session drifting lower. DJT hit a daily high of $79.38 but closed at $57.99. The closin price was close to the high from January 23.
Expect several inside days over the rest of the week before traders have the chance to take aim once again at the Tuesday intraday high. Both the Awesome Oscillator and the Relative Strength Index (RSI) tell us that there is more room to run higher.
DJT daily stock chart
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