Trump Media Stock Slumps Amid Growing Harris Momentum in Debate
Shares of Trump Media & Technology Group (TMTG), the company behind Truth Social, experienced a sharp decline on Wednesday Following the debate. The stock dropped 14% in heavy trading as the odds of a Democratic victory in the upcoming presidential election improved. Kamala Harris, the Democratic candidate, gained ground after a contentious debate, putting former President Donald Trump on the defensive.
Harris Gains Edge Following Debate
The presidential debate proved to be a turning point for Harris. She attacked Trump on multiple fronts, including his fitness for office, his support for abortion restrictions, and his legal troubles. Trump, visibly angered, responded with a series of claims that were later debunked. This performance appeared to have boosted Harris’ chances of winning the election, which impacted the stock price of TMTG.
Trump holds more than a 50% stake in the company, which has a market value of $3.7 billion. Retail traders are drawn to TMTG shares, making them sensitive to Trump’s election prospects. Since mid-July, the stock has fallen nearly 60% as Harris’ campaign momentum grew after she replaced President Joe Biden as the Democratic nominee.
Betting Markets React to Debate
Following the debate, PredictIt, an online betting platform, adjusted its odds. The chances of a Trump victory dropped by 6 cents to 47 cents, while Harris’ odds rose to 57 cents from 53 cents. This shift reflects the broader market sentiment, as investors reacted to the growing possibility of a Democratic win.
Matthew Tuttle, CEO of Tuttle Capital Management, commented, “At this point, DJT is the betting stock for Trump winning.”
Pop Culture Influence on the Election
Harris received additional support from pop megastar Taylor Swift, who endorsed her in an Instagram post to her 280 million followers. Swift’s endorsement provided Harris with a noticeable boost in support, further tipping the scales in her favor.
“The U.S. Presidential debate achieved its goal by providing a decisive edge to one of the candidates in what has been an exceptionally close race,” said Charu Chanana, global market strategist at Saxo.
Trump Media Valuation Remains High Post Debate
Despite the recent slump, TMTG’s valuation remains high. The company, which reported just $4.1 million in revenue for 2023, holds a market value more than 900 times its earnings. By comparison, Meta Platforms, which generated $131.9 billion in 2023, trades at a much lower price-to-revenue ratio of 9.6.
About 5.8 million shares of TMTG were traded shortly after the market opened, close to the company’s 25-day moving average.
Lock-Up Expiry Poses Further Risks
TMTG’s stock has seen considerable volatility since its listing through a reverse merger in March. The company’s market value surged to as much as $9.2 billion as Trump’s election chances rose earlier in the year. However, the stock has since slumped by 76% from its March highs.
Another potential headwind for the stock looms in the form of an upcoming shareholder lock-up expiry. This event could allow Trump and other investors to sell shares as early as next week. The influx of additional shares could further drive down the stock price.
If the stock trades at or above $12 for 20 trading days between Aug. 22 and Sept. 20, Trump will be able to sell shares starting Sept. 20. Otherwise, the lock-up period ends on Sept. 25. As of Wednesday, TMTG’s shares were trading at $16.09.
Uncertain Future for TMTG
The future of TMTG is tied closely to Trump’s political fortunes. Tuttle remarked, “If he wins the election, he doesn’t have to sell his shares, and DJT can grow into something. If he loses, he has to sell his shares to pay legal bills, and it is unlikely DJT is a going concern.”
As the presidential race intensifies, the stock market is expected to remain sensitive to political developments. Investors in TMTG will be closely watching future debates and other key moments leading up to the 2024 election.
TMTG shares fell sharply on Wednesday, driven by Kamala Harris’ improved odds of winning the 2024 presidential election. Trump, a majority shareholder in Trump Media, saw his company’s stock decline 14% following a debate in which he struggled to counter Harris’ attacks. With a lock-up expiry looming and further political uncertainty ahead, the stock’s future remains closely tied to the election outcome.
Chart by Trading View
