Trump Media’s recent swings in the market underscore the danger of buying into a company that is so inextricably linked with a single person.
Donald Trump has vowed that he has no plans to cash out of his massive stake in the parent company of his social media venture, Truth Social.
Wall Street is having a hard time believing that.
Shares in Trump Media & Technology Group have swung wildly in the two weeks since the former president said he wouldn’t sell “because I don’t want to have my voice shut down.” The stock first jumped on the news, before plunging 30 percent and dragging the price down to its lowest levels since debuting in the markets in March. The shares have since pared back some of those losses.
It’s a string of dramatic moves that financial experts say is at least partly attributable to a lingering anxiety among investors that Trump Media insiders, including Trump himself, could at any point dump shares in the market and send the stock falling further. The GOP presidential nominee holds nearly 115 million shares in the company — a stake worth about $1.6 billion.
At one time earlier this year, that stake was worth as much as $6 billion.
“He’s, shall we say, a mercurial person,” Interactive Brokers Chief Strategist Steve Sosnick said. “So it’s not 100 percent clear that he won’t change his mind — or hasn’t changed his mind.”
One major shareholder, United Atlantic Ventures, has already exited its position in Trump Media, according to a regulatory filing released Thursday. United Atlantic Ventures — whose managing member is Andrew Litinsky, a former contestant on Trump’s “The Apprentice” — owned more than 7.5 million shares earlier this year. It now holds 100, according to the filing.
A publicly traded social media company whose majority shareholder is a leading presidential candidate would appear to be a solid investment opportunity, especially just weeks out from Election Day. If Trump wins back the White House, Truth Social — Trump Media’s prized asset — could quickly become even more of a must-read site for journalists, congressional aides and lobbyists who are responsible for tracking every word he posts online. That’s not to mention millions of others who would simply want to know what the president is thinking.
But Trump Media’s recent volatility in the market underscores the danger of buying into a company that is so inextricably linked with a single person. In this case, Trump’s fate come November could determine what happens with Trump Media.
“The calculus that investors are asking themselves is: Is he going to be reelected or not? And right now, it’s a coin toss,” said Gene Munster, managing partner at Minneapolis-based Deepwater Asset Management. “This is binary — there’s no middle ground in this kind of investment. It’s even hard to call it investing. This comes out to basically gambling on the election.”
“If you’re an investor and you’re looking at what’s ahead, there is this massive unknown,” Munster added, referring to the election. “Even if you say you’ve got a 50 percent chance of being up 100 percent and a 50 percent chance of being down 100 percent, that’s just a bet that most investors probably don’t want to take.”
Indeed, Trump Media has laced its regulatory filings with warnings about how the former president’s popularity and legal woes could weigh on the stock. Its share price often moves in concert with news about the election.
And while Trump is not a director or executive at the company, the board is stacked with some of his closest advisers, including his son, Don Jr.; Robert Lighthizer, the former U.S. trade representative; and onetime SBA Administrator Linda McMahon, who is also heading up the Trump transition alongside Wall Street veteran Howard Lutnick.
When Trump Media went public, the stock was met with great fanfare from individual investors — many of whom were believed to be buying up shares as a way of supporting Trump. But the stock’s struggles were heightened during the lead-up to last week, when a prohibition period that had barred Trump and other insiders from selling ended. Shares rebounded more than 15 percent earlier this week but dipped again Thursday. The stock is now down 82 percent from its highs of almost $80 per share.
Now, Trump is able to freely sell his shares — though he says he has no need to. Earlier this month, when asked about his plans for the stock during a press conference, he said: “I have absolutely no intention of selling.”
Trump Media spokesperson Shannon Devine said the company had $344 million in cash and cash equivalents, as well as no debt, at the end of June. She noted that it also recently expanded its business with a new in-app streaming platform.
“With further innovations planned soon, TMTG is optimistic about our growth strategy,” Devine said in an emailed statement.
The company did not immediately respond to a request for comment about the United Atlantic Ventures filing.
Investors are still clearly uneasy. If Trump loses, Tuttle Capital Management CEO Matthew Tuttle said it’s unclear whether there is enough “there” for Trump Media to build on.
“Even without Elon Musk, Tesla’s got something,” Tuttle said. “Without Trump, this stock has nothing.”
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