Donald Trump’s loss-making social media company has quickly become a magnet for bullish day traders, competing with Elon Musk’s Tesla and chipmaker Nvidia for their attention as politics vex retail investors. advances the agenda for
Trump Media and Technology Group, which runs Truth Social, has been among the three most traded stocks on the interactive broker’s platform for the past two weeks, along with two giants.
The company – which takes its DJT tick from the president’s chosen initials – is small despite buoyant trading, although its $6bn equity valuation dwarfs the $2.6mn it has reported in revenue so far this year. is Volatile stocks have gained an average of about 7% per day this year.
Tesla, Musk’s electric car maker, by contrast, is valued at about $1tn and Nvidia at $3.6tn. Strategists said TMTG’s presence alongside such giants suggested a parallel with the 2021 meme stock mania when prices of companies popular among active traders, including retailer Gamestop and cinema chain AMC, deviated from their business fundamentals. It has increased more.
“Being up there with Nvidia and Tesla but being a fraction of the size is a hallmark of meme stocks,” said Steve Sosnick, chief strategist at Interactive Brokers, an online platform with a large number of active traders.
“When you look at float trading multiples, it’s not about investing, it’s about trading pure and simple,” Sosnick added. “It’s day trading – its aggressive, highly active traders look for opportunities in high-volume, high-volatility situations.”
TMTG has traded an average of about 90 million shares per day so far this month, compared with less than 9 million per day in the six months to the end of September from late March, when the company launched. Meanwhile, the original meme stock darling, GameStop, has lost nearly two-thirds of its volume since July.
High share turnover can lead to dramatic price swings. TMTG’s recent volume is roughly equivalent to all shares not held by Trump or insiders. Tesla and Nvidia typically see between 1 percent and 3 percent of their free float trading on any given day.
Online broker Robinhood said TMTG was among the top 10 most frequently traded this month, while data from investment flow specialist Wanda Research showed net inflows into the company by small traders this week. showed inflow, although shifted downwards from the peak level. Election
“Retail investors were trading DJT with selective odds, and now that’s gone, [it has] Be a hot potato game where they just go in and out,” said Marco Iacchini of Wanda.
Retail traders on Reddit’s trading forums have regularly compared DJT, as the stock is known, with GameStop, the brick-and-mortar video game outlet whose shares retail investor Keith Gill owns on social media. It was popular. nom de guerre Roaring Kitty
“I like DJT as a stock,” said Ash Jatla, a UK-based Reddit user who bought the stock after it rallied in September and doubled his money. But he made a distinction between trading terms like DJT and investments, a category in which he puts Tesla.
“That’s different. I invested in Tesla, because even if Trump wins or loses, there’s factual information backing Tesla — the company is good, it’s a long-term investment. Okay,” he added.
Since the election, shares of TMTG have also fallen 17 percent — a stark contrast to other so-called Trump trades that have outperformed Trump’s victory, including Tesla, Bitcoin and the broader U.S. Stock market. All three surged, with Bitcoin hitting a record and Tesla up 28 percent.
TMTG’s slide has wiped $1.3bn from the company’s value and $670mn from Trump’s personal fortune. Its holdings account for more than half of the president-elect’s $5.7 billion fortune, as calculated by Bloomberg, with the rest comprised of real estate, cash and golf resorts.
Tesla’s rally, however, fueled by founder Elon Musk’s closeness to Trump, has given the car entrepreneur a fortune of more than $28 billion.
Trump owns 53 percent of TMTG stock, according to the filing. Beyond its stake, the company has touted its massive retail shareholder base as a sign of support for its cause.
Last Friday, the president-elect used Truth Social to blast what he called “false, false, and possibly illegal rumors” that he might sell shares of TMTG — which he said his There is no intention to do so.
Even with the added focus on the election, Truth Social is smaller in terms of its reach, averaging 646,000 daily visits to its website this month, according to Similarweb, compared to 155mn per day for Musk’s X platform. .
“I can’t imagine any real equity analyst bothering to look at it now, purely a trading vehicle at this point,” said Matthew Tuttle, a portfolio manager who runs thematic exchange-traded funds. “It’s probably worthless from a conventional evaluation point of view.”
Volatility in TMTG is so intense that it has led to tit-for-tat plans with boutique ETF provider RexShares, to launch a leveraged fund that is supposed to double TMTG’s daily return or loss. is
Leveraged ETFs are a favorite of short-term day traders looking to juice their profits. Tuttle still plans to launch the fund when shares calm down.
Bearish bets on TMTG shares have been almost flat with 17mn shares sold short – meaning used in trades that take advantage of falling share prices. The stakes are equivalent to about 8 percent of the company’s shares.
Finding shares to borrow for short trading is made difficult by the small number of large shareholders, who are more likely to lend their holdings.
“Its longevity, not short sellers, is driving this market. Stock borrowing capacity is very thin,” said financial data expert Matthew Interman, managing director of S3 Partners. “Short pressure is likely if price moves higher but for now the shorts are holding the line.”
