Trump's social media stock is making an epic comeback as election nears

[mahatmakanejeeves]

Business / Investing
Trump’s social media stock is making an epic comeback as election nears

By Matt Egan, CNN
3 minute read
Updated 4:10 PM EDT, Mon October 14, 2024


Trump Media & Technology Group has become a way for traders to bet on whether or not former President Trump will be back in the White House.

New York (CNN) — Former President Donald Trump’s social media company is on fire on Wall Street. It’s all about Trump’s perceived chances of retaking the White House. … Up until very recently, Trump Media & Technology Group had been in meltdown mode. Its share price dropped to a record low of $12.15 on September 23, marking a stunning 82% crash from its high.

But the owner of Truth Social is enjoying a massive rebound of nearly 150% in the three weeks since, more than doubling its share price. It spiked nearly 50% last week alone and surged another 18% Monday. … It’s a remarkable turnaround, even for a notoriously-volatile stock that has been described as a meme stock on steroids.

Trump Media did not announce a sudden revenue stream or a flashy new product that could explain the move. It didn’t land an endorsement from Wall Street analysts or a major shareholder.

Instead, the turnaround has been fueled by the perceived odds of Trump winning in November. Trump Media has long served as a way for traders to bet on the election.

{snip}

[bucolic_frolic]

1. Fairly typical of new issues

Though I doubt the lows are in.

[mahatmakanejeeves]

2. I'd buy a few thousand shares, but all my money is in Trump watches. NT

[bucolic_frolic]

3. Wise choice.

and very

[Abolishinist]

5. I've got 2,000 tRump bibles that I'll

trade you for one of your watches.

[Bev54]

4. I believe this is one more reason the polls are being manipulated, to give the impression Trump is going to win

to increase value of his stock.

[Hugin]

7. Yeah, the longer the long shot...

The bigger the payoff. They’re pretty obvious about it now.

It’s become a hedge and not only DJT, but in the markets as a whole.

[LetMyPeopleVote]

6. The greater fool theory in operation

I am sorry for these idiots but they were stupid to trust TFG. Meme stocks rely on the greater fool theory. I was amused to see that DWAC/Trump Media is classified as a meme stock where the value is due to personality and not due to the real value of issuer of the meme stock. This article is a good discussion of the meme nature of DWAC/TMT.
https://www.vanityfair.com/news/donald-trump-truth-social-media-merger

Trump’s financial future now hinges on some of the strangest fads in corporate finance—meme stocks, SPAC deals, and cult-of-personality investing. If Trump can find a way to act fast, it might just be the bailout he desperately needs.

Truth Social is a bad imitation of Twitter, where Trump was an unavoidable presence long before he ran for president. It’s chock full of stale red-pilled memes, MAGA conspiracy theories, and of course, Trump. That’s the main draw. Truth Social is the only place the former president now regularly posts his unfettered thoughts......

DWAC is best thought of as a meme stock. You may remember the meme stock fad from when retail investors on Reddit successfully coordinated a short squeeze with GameStop stock, before glomming onto a series of other millennial nostalgia brands like AMC Entertainment, BlackBerry, and Bed Bath & Beyond. Meme stocks are often publicly traded companies that attract an inordinate percentage of individual investors and their stock performance fluctuates in a way that’s significantly divorced from the reality of their underlying business. Combine those two trends and you’ll start to see why Trump’s media company could be valued at roughly $9 billion if it merges with DWAC.

Jay Ritter, a finance professor at the University of Florida, says meme stocks often depend on the “greater fool theory of investing,” meaning rational investors might buy in expecting the stock price to rise and betting that they can sell their shares to a greater fool willing to buy them at a higher price. In this case, however, Ritter speculates there is an inordinate number of individual retail investors compared to institutional investors, such as hedge funds, that normally own SPAC shares prior to a merger. “Here you’ve got ideology involved [too]—as far as I can tell, the vast majority of DWAC investors are Trump political investors, and they’re to some degree putting their money where their mouth is… My suspicion is most of them have bought the stock as a show of political support.” In this way, Trump is conducting yet another public fundraising from his supporters—this time through the public markets.

Idiots who purchase meme stocks are betting that they can get out before the other idiots figure out that the stock is worthless