As Americans head to the polls, the future of Trump Media & Technology Group Corp. hangs in the balance, tied closely to the political fortunes of its namesake. This moment is pivotal for the loss-making social media platform, particularly as it has mirrored the volatility of election betting markets in recent months.
Since its inception, Trump Media’s stock has experienced dramatic fluctuations, notably rising after the attempted assassination of Donald Trump in Pennsylvania in July, only to decline as Democrat Kamala Harris entered the race and tightened the polling gap with her Republican opponent. With both candidates now nearly neck-and-neck, shares have seen seven double-digit movements in the past eight trading sessions.
On election day, the stock’s volatility was evident, as shares quickly erased a 19% gain within minutes, dropping as much as 8.4% to $31.45 before stabilizing, resulting in multiple trading halts due to volatility.
Market analysts believe a Trump victory could increase user engagement on Truth Social, his preferred platform for communication. However, the site has struggled to attract new users and advertisers since its debut on the stock exchange following a blank-check merger. Conversely, a win for Harris could diminish the platform’s chances of growth.
In October, Trump Media shares more than doubled as betting markets indicated strong support for the Republican candidate, despite high-quality polling revealing little change in voter sentiment. The company’s market valuation has now surpassed established brands like Whirlpool and Harley-Davidson, even as it reported less than $1 million in revenue in the second quarter. This disconnect highlights the election as a crucial factor for the company’s future.
Options expiring soon reflect an implied annualized volatility of approximately 600%, significantly exceeding its already high 10-day volatility of 237%. In comparison, this volatility is more than four times that of Bitcoin and Nvidia over the same period.
Experts caution that the long-term outlook for Trump Media remains unclear. A Trump victory might not enhance the company’s value, especially given its lack of profitability and difficulties in expanding its user base. Conversely, a loss for Trump may not spell doom for Truth Social, given his enduring popularity among his supporters. Companies like MicroStrategy and Tesla illustrate how charismatic leaders can significantly influence stock performance.
Short sellers have been particularly active around Trump Media, with data from S3 Partners showing that over 97% of all available shares have been borrowed for bearish bets, leaving fewer than 1 million shares available for additional shorting.
If the stock rallies post-election, it could lead to a rush of investors seeking to exit before potential losses mount. Short sellers have already faced significant losses this year, experiencing swings of over $300 million in paper profits and losses.
Market movements suggest that Trump’s political momentum drives stock rises, while declines often align with downturns in sectors thought to benefit from a Trump re-election. As analysts note, the company’s fundamental business performance remains disconnected from its staggering $6.9 billion market valuation.
On Monday, shares showed extreme volatility without any significant news, initially dropping 5.5% before rebounding with a 17% increase, ultimately closing 12% higher. Despite a 183% rise from a September low, the stock remains over 40% down from its initial closing price, underscoring the uncertainty surrounding its future.
