Trump Media (DJT) Stock Rally Continues as Polls Show Dead Heat
Shares of Trump Media stock have tripled in value since September, fueled by the former President’s improved election odds in the polls and betting markets.
As the US Presidential election approaches, shares of Trump Media (NASDAQ: DJT) stock continue to rise, driven by Donald Trump’s improved election odds. DJT stock has experienced an extraordinary rally over the past month, tripling in value since September and reflecting a notable shift in investor confidence, especially as public sentiment aligns with betting market predictions that are favoring the former President.
The surge has investors wondering if Trump’s stock, which runs the social media platform Truth Social, can sustain its momentum. Truth Social, widely recognized as a conservative-leaning alternative to platforms like X (formerly Twitter), has capitalized on Trump’s high-profile political return, seeing substantial increases in engagement following his campaign stops and the app’s recent expansion to devices like Apple (NASDAQ: AAPL) TVs, Alphabet’s (NASDAQ: GOOGL) Android TVs, and Amazon (NASDAQ: AMZN) Fire TVs.
Politics-Driven Rally
The recent stock surge suggests that the upcoming election is having a profound influence on DJT’s market performance. Trump’s appeal to a dedicated base of voters and a competitive standing in the polls has made DJT more than just a technology stock. With political betting platforms like Polymarket and PredictIt increasingly indicating a Trump victory, DJT has started to serve as a barometer for his perceived chances of reclaiming the White House.
“Trump’s political prospects have improved recently, and this makes the stock more valuable,” says Michael Ohlrogge, an NYU law professor.
This week alone, DJT stock rose by 32%, a notable boost corresponding to Trump’s expanding media footprint. This includes his appearance on the Joe Rogan Experience, where his voice will reach millions of young male voters. Trump’s visibility in high-impact media is effectively strengthening his campaign’s reach, appealing to a broad audience that includes conservative supporters, political analysts, and young, undecided voters.
Source: PowerfulJRE YouTube
Investors also seem encouraged by Trump’s own commitment to the company. Despite the expiration of a lockup period on September 19—allowing insiders the option to sell their shares—Trump himself announced he has “absolutely no intention of selling.” In his words, he views his stake in DJT not only as a financial asset but as a means of amplifying his message, saying, “I love it. I use it as a method of getting out my word”.
Trump’s Rise in Polls and Betting Odds
Since the campaign took a dramatic turn with President Joe Biden’s endorsement of Kamala Harris in July, polls and betting odds have tightened significantly. Though Harris maintained a small lead initially, recent data shows a shifting tide.
According to the latest Real Clear Politics polling average, Harris, who recently led by as much as 2%, currently leads Trump by just 0.1%. In the crucial swing states of Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin, Real Clear Politics has Trump ahead in all seven battleground states.
With online betting sites like Polymarket and PredictIt showing even better odds for Trump, investor enthusiasm has only heightened. As of Friday, PredictIt shows Trump leading by 18 points, up from being down by as much as 13 in September. Meanwhile, Polymarket has Trump as an even bigger favorite, with the former President currently up 27 points over Harris. Polymarket currently lists Trump as a 63.7% favorite to win the 2024 election, while PredictIt has him at 61%.
The apparent reversal in his election chances has caused Trump-related stocks, such as Phunware (NASDAQ: PHUN) and conservative platform Rumble (NASDAQ: RUM), to also rally, climbing 25% and 3% today, respectively.
The aligning markets seem to reinforce DJT’s stock value, as investors take cues from Trump’s perceived political momentum. Yet, the stock is not driven purely by fundamentals. With revenue at only $837,000 in the second quarter and no clear path to profitability, DJT’s performance defies conventional financial metrics. Its price-to-sales ratio, for example, remains astronomically high, reminiscent of meme stocks, such as GameStop (NYSE: GME) and AMC Entertainment (NYSE: AMC) at their peak.
Some analysts, however, question whether this rise is sustainable. Ohlrogge highlights the challenges ahead, stating:
“If Truth Social still hasn’t been able to attract very significant usership or revenue now, at what I would think is peak attention for Trump, then it seems hard to see how that gets much better even if Trump wins the White House.”
His remarks underline concerns that Truth Social’s appeal may be transient and closely tied to election-driven sentiment.
High-Profile Supporters and Media Buzz
Adding to the stock’s allure is the involvement of high-profile supporters. Earlier this month, Tesla (NASDAQ: TSLA) CEO Elon Musk made headlines by attending a Trump rally in Pennsylvania. Musk, who has publicly voiced his support for Trump, energized the crowd, saying Trump could “preserve democracy in America,” stressing that it may be “the last election” if Trump does not win. Musk’s presence not only symbolized an endorsement but also hinted at a potential alliance that could benefit both Trump’s campaign and his media ventures.
Trump’s ability to galvanize influential figures like Musk has bolstered confidence in his platform, further lifting DJT’s stock. Additionally, Trump’s recent stops at a Pennsylvania McDonald’s (NYSE: MCD) and appearances in other battleground states have amplified the media buzz around his campaign, engaging both investors and undecided voters alike. The combination of a strong public presence and influential supporters reflects a strategic approach that intertwines Trump’s campaign narrative with his media brand.
— Donald J. Trump (@realDonaldTrump) October 20, 2024
Source: Donald J. Trump X
Challenges Amid Market Volatility
While DJT’s rapid rise excites investors, it also highlights the stock’s volatility, a trait exacerbated by short sellers. As of the latest data, nearly 17% of DJT shares available for trading are sold short, indicating skepticism about the stock’s ability to maintain its value long-term. The recent rally, however, may have squeezed some of these short positions, adding to the stock’s upward momentum.
Analysts remain cautious, noting that Trump Media’s fundamentals raise questions about its long-term viability. The company reported a $16.4 million net loss in the last quarter, half of which resulted from expenses related to its merger with Digital World Acquisition Corp. The market capitalization of DJT stands at around $7.1 billion, a valuation that puzzles some investors considering the platform’s modest revenue and user engagement metrics.
Should Trump lose the election, analysts predict that the stock could face a significant downturn. Some insiders, particularly Trump’s former co-founders who starred in “The Apprentice,” have already sold substantial portions of their holdings, hinting at possible caution within Trump’s circle. The fluctuation in DJT’s stock price thus mirrors both investor optimism and the potential risks tied to Trump’s political future.
Looking Ahead
As the November election nears, DJT stock is likely to remain at the mercy of Trump’s political fortunes. While the current surge signals strong investor confidence in Trump’s ability to reclaim the presidency, market sentiment may shift as rapidly as the election polls. For now, the rally reflects the fusion of politics and finance, as DJT’s value ebbs and flows with Trump’s perceived chances of victory. Investors, bolstered by Trump’s rising odds, are riding the wave with cautious optimism, but they know the stakes are high.
With the U.S. at the brink of another potentially transformative election, DJT stock may continue to defy conventional financial wisdom, operating as a proxy for the political aspirations of its majority stakeholder. Whether this strategy will yield sustainable returns for Truth Social and its investors remains an open question—one that may ultimately be decided at the polls.
Trump Media (DJT) Stock Price Action and Chart
Shares of Trump Media (NASDAQ: DJT) stock climbed another 11.44% on Friday, closing the day at $38.95.
YTD, DJT stock is up 123.21%.
View Trump Media Interactive Stock Chart on Barchart
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Disclaimer: Wealthy VC does not hold a position in any of the stocks, ETFs or cryptocurrencies mentioned in this article.
