If you’re looking for a volatile stock to invest in this year, Trump Media and Technology Group, trading under symbol DJT, might fit the bill. The company went public via a special purpose acquisition group merger on March 26, 2024, and provides access to Truth Social, the social media company founded by former President Donald Trump.
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The stock shot up 41% right after it began trading, but it’s already given back all of those gains and more. As a company tied to one of the two candidates in the November presidential election, it’s likely that the stock will continue to be volatile throughout 2024. But is the company a good bet if Trump loses the election? Here’s a look at the financials of Trump Media and Technology Group, how the stock has been trading and the viability of the company as a long-term investment.
What Is Trump Media and Technology Group?
Trump Media and Technology Group is the parent company of Truth Social. Trump created the social media company after being banned from both X (formerly Twitter) and Facebook in the wake of the Jan. 6 attacks on the Capitol, as reported by the Associated Press. Trump holds approximately 57% of the outstanding shares of Truth Social, making him the majority shareholder.
How Is DJT Performing?
After spiking over 40% immediately after it began trading, DJT has been in a major downtrend. On April 10, 2024, the stock closed at $34.26, down 48% from its closing high of $66 on March 27.
The stock is volatile for a number of reasons. First, as it’s closely tied to Donald Trump, there is a lot of emotion attached to the stock. Part of the reason DJT soared on its first day of trading was no doubt in part due to the excitement among the former president’s supporters. But the hard numbers behind the company play a major role as well.
Trump Media and Technology Group generated $4.1 million in revenue in 2023 but lost $58.2 million — and those losses are likely to continue. Even the company’s CEO, Devin Nunes, said that for the foreseeable future, the company will continue to operate at a loss, and it’s impossible to predict when or even if the company will ever become profitable. The company’s own auditor said that DJT’s losses raise “substantial concern” about whether it can even continue as a going concern. With these types of financial troubles hanging over the stock, it will likely continue to remain volatile.
But that’s not all. Short sellers, or those who profit when a company’s stock falls, have gone after the company in a big way, shorting about 12% of all outstanding DJT shares. That’s a high number for any stock, and it could be contributing to the downward trend in the stock. Selling will likely continue unless the share price makes a dramatic reversal.
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What Will Happen To DJT Stock If Trump Loses?
Trump losing the November election may very well put additional pressure on DJT shares. As the company itself is intimately tied to Trump, losing what may turn out to be his last election could cause investors to walk away from the stock. With no earnings to help push the stock up, it will likely remain in the hands of speculators, making its future unpredictable.
What Do Experts Say About DJT’s Long-Term Outlook?
One of the reasons it’s hard to get a handle on DJT stock is that there aren’t any Wall Street analysts providing research coverage on it as of yet. This is likely to change before the November election, so you may want to wait to get some more information before you make an investment decision on the stock. In the meantime, the stock will likely trade more on emotion than fundamentals until it can get closer to earning a profit. Something else that analysts will likely factor in when they finally issue their research reports is that companies that go public via a special acquisition company, as DJT did, don’t have the best track records.
How Should You Play Trump Media & Technology Group Stock Before the Election?
If Trump Media and Technology Group somehow manages to turn a profit earlier than expected, or if Wall Street analysts start slapping buy ratings on the stock, it could have a significant run. Of course, the opposite is also true. If short sellers continue to bet against the stock, if the company continues to lose money, and/or if Trump loses the November election, the selling may very well continue. But at the present time, deciding whether or not DJT can be a long-term winner is more of a speculation than anything else.
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This article originally appeared on GOBankingRates.com: What Happens To Your Investment in Trump Stock If He Loses the 2024 Election?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
