In a striking response to the recent presidential debate, shares of Trump Media & Technology Group (TMTG) plummeted by over 10% in premarket trading on Wednesday, reflecting growing investor skepticism about Donald Trump's political prospects. The significant drop in TMTG's stock price came after a contentious debate where Vice President Kamala Harris delivered a series of sharp critiques against Trump, questioning his fitness for office and highlighting his legal troubles.
The debate, widely regarded as a win for Harris, seems to have shifted market sentiment, as betting odds increasingly favor her victory in the 2024 election.
Trump, who holds a substantial stake in TMTG, has seen his company's fortunes closely tied to his political performance. The media company, which owns the social media platform Truth Social, has been popular among retail traders as a proxy for betting on Trump's chances of returning to the White House. However, the latest debate appears to have rattled investor confidence, with TMTG's stock dropping to its lowest level since it went public in March.
The market reaction was swift. As soon as trading began on Wednesday, TMTG's shares fell sharply, a clear indication that investors were not impressed by Trump's debate performance. This marks a stark contrast to the initial enthusiasm surrounding Trump Media, which had surged by 9% earlier in the week in anticipation of the debate. But as Harris emerged as the stronger candidate, according to market sentiment and betting odds, the stock quickly reversed course.
Matthew Tuttle, CEO of Tuttle Capital Management, commented on the market's response, saying, "The perception in the market is that Harris won the debate, and that's reflected in the drop in TMTG's stock. If Trump loses the election, it's likely that he will have to sell his shares, which could drive the stock down even further."
Adding to the uncertainty is the impending expiration of a lock-up period that has prevented Trump from selling his 114.75 million shares in TMTG. This lock-up is set to expire later this month, potentially allowing Trump to offload a portion of his stake. However, experts caution that such a move could lead to a significant decrease in the stock's value, especially if Trump's political fortunes continue to decline.
Michael Block, chief strategy officer and co-founder of AgentSmyth, offered further insight into the market dynamics at play. "Given TMTG's lack of earnings and other traditional metrics, the stock is more of a speculative play tied to Trump's political narrative. Investors didn't like the story that Trump was telling during the debate, and that's why we're seeing this sell-off."
