Could Biden’s comments regarding “Trump’s stock” have acted as a lid or fuel for sentiment among DJT shareholders?
- Biden’s Dig and Truth Social’s Reply: Biden’s jab at Truth Social stirred controversy. The platform highlighted Biden’s own use and financial stability.
- DJT’s Market Impact and Worries: DJT’s stock heavily relies on market sentiment driven by Trump’s actions. Concerns persist over its valuation and financial performance, attracting loyalists and speculators.
- Recent Trading and Potential Volatility: DJT surged after oversold trading, fueled by media attention. Limited shorting options may lead to volatile swings, posing risks for short sellers.
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Biden mocks Trump on Truth Social
President Joe Biden recently mocked Donald Trump over his social media platform, Truth Social, the main product of Trump Media & Technology Group (NASDAQ: DJT) while discussing his tax plan, which ensures that individuals earning less than $400,000 won’t pay extra in taxes. Biden quipped, “I have to say, if Trump’s stock in Truth Social drops any lower, he might do better under my tax plan than his.” He made the remark to laughter from the audience, adding, “It’s possible.”
In response to Biden’s comments, a representative from Truth Social stated in an email, “Given that President Joe Biden regularly posts to his campaign account on Truth Social, we believe he recognizes the value of a free-speech social media startup that is debt-free and has over $200 million in the bank.”
Stirring up a hornet’s nest
Biden’s statement regarding Trump’s media company has ignited a firestorm of controversy. This is primarily because investing in DJT is essentially a bet on Donald Trump himself, who founded the company and owns around 60% of its shares.
Since its formation by Trump in October 2021, when he initially announced plans to take the company public through a merger with a special purpose acquisition company (SPAC) called Digital World Acquisition Corp. (DWAC), shares in the “Trump stock” have traded largely in line with market sentiment, which has been heavily influenced by Donald Trump’s actions rather than the company’s business fundamentals.
With Trump Media currently valued at around $3.5 billion, as of the latest figures, and having reported a net loss of $58.2 million in 2023, with only $4.1 million in revenues, there are concerns about the company’s potentially inflated valuation and its ability to generate sustainable profits. Additionally, the situation raises questions about whether this could ultimately serve to enrich a powerful figure like Donald Trump even further.
In a sense, DJT has behaved akin to a meme stock, with a mixture of loyal shareholders (pro-Trump) buying into the narrative, while other traders attempt to capitalize on the volatility surrounding this controversial stock.
What the charts say
Since its flashy IPO, DJT shares have been on a steep downtrend, plunging by over 50%. However, following consecutive days of trading in oversold conditions, DJT shares have experienced a strong rebound since the trading session on April 16th, surging more than 25% as of the latest check, bringing them back from neither oversold nor overbought territory.
Trading volume remains significant, as does the media buzz surrounding the stock, particularly on social media platforms. DJT has emerged as one of the most discussed stocks on Reddit platforms, including Wallstreetbets, and has even surpassed popular names such as Nvidia (NYSE: NVDA), Apple (NYSE: AAPL), and Tesla (NYSE:TSLA) in Google searches at times.
Despite recent headwinds related to weak Truth Social business figures disclosed in the company’s filings and news of dilution due to equity sales, potentially by Donald Trump himself, the hype surrounding DJT remains somewhat alive.
With borrowing costs remaining extremely high, particularly due to the disadvantageous structure for individual traders to short the stock, given that only 20% of the shares are available to the general public, short sellers could face significant losses from upward corrective movements following recent declines. This could contribute to further volatility for DJT, likely resulting in short-term upward movements.
(Read also from Wall Street Trends: DJT: Trump’s Media Group as a Market Phenomenon)
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content)
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