Shares of Trump Media & Technology Group, the parent company of Truth Social, have been making a remarkable recovery in recent weeks, as traders and investors perceive an increased chance of Donald Trump regaining the White House in the upcoming 2024 election. The company, which had been languishing after its stock plummeted to a record low of $12.15 on September 23, has seen its stock price more than double in just three weeks, surging by roughly 120%. The turnaround has been fueled not by any major business announcements or product launches but by the shifting political landscape as the former president's chances of winning the election appear to improve.
In just the past week alone, Trump Media's stock spiked nearly 50%, climbing another 5% on Monday to reach a price of $26.40 per share. This dramatic rebound stands out even in the volatile world of so-called "meme stocks," a category that has come to include Trump's social media venture. The stock's erratic movement has often been driven by political factors, and many view it as a direct reflection of Trump's political fortunes.
The resurgence in stock value has coincided with a shift in betting markets and polls, where Trump is now seen as a serious contender in the race against Vice President Kamala Harris, the presumed Democratic nominee. Platforms like PredictIt and PolyMarket have shown a noticeable shift in favor of Trump, with traders now giving him a slight edge over Harris. As of Monday, Trump held a 54% chance of victory on these platforms, while Harris was trailing with odds of around 46%. This is a significant reversal from earlier in the year, when Harris maintained a lead.
Matthew Tuttle, CEO of Tuttle Capital Management, summed up the situation succinctly: "It's really simple. People realize that if Trump gets elected, this stock has the potential to do something. And if he doesn't get elected, it probably goes to zero." Trump remains the face of the company, holding more than 114 million shares and wielding significant influence over the platform. The value of Trump's personal stake in the company has risen by approximately $1.7 billion since the stock's September low, pushing the total value of his shares to over $3 billion.
While the market buzz surrounding Trump Media has been driven by political sentiment, the stock remains far below its all-time high of $66, reached in March 2024. The company still faces significant skepticism from financial experts. Jay Ritter, a finance professor at the University of Florida, noted that the 100% spike in value is largely speculative and driven by political betting rather than business fundamentals. "Meme stocks thrive on attention, and in the case of Trump Media, the price also reflects the expectations of who will win the November election," Ritter said.
Ritter remains cautious about the company's long-term viability, arguing that Trump Media lacks a sustainable business model. He believes that without a clear plan for generating revenue, the stock remains significantly overvalued. "At today's stock price of about $25, the stock is overvalued by 1,000% or so," Ritter stated, warning that a major correction could be on the horizon. He suggested that a 90% drop is likely if Trump's election chances fade or if the company fails to prove its worth beyond political speculation.
Interestingly, the stock's recent rally has also been bolstered by the fact that Trump has not sold off any of his shares, despite the lifting of lock-up restrictions earlier this year. Some analysts had speculated that Trump might liquidate his holdings, but his decision to hold onto his shares has provided stability to the stock. As Tuttle noted, "If Trump was winning in the polls but you were convinced he was going to sell, you certainly wouldn't see the move we've seen. The fact he says he won't sell - and that he actually hasn't sold - provides the backdrop for the rally."
Despite the enthusiasm among retail traders and Trump supporters, financial experts remain divided over the stock's future. Trump Media is still facing significant challenges, both in terms of business performance and the uncertain political climate. The upcoming election will likely continue to be a major factor in determining the stock's trajectory, but whether the company can build a lasting business model remains to be seen.
