The stock price of Trump Media & Technology Group (NASDAQ:DJT), owned by former President Donald Trump, took a significant hit after Democratic candidate Kamala Harris gained ground in the 2024 presidential election betting markets. Shares of Trump Media slumped 14% following a heated debate, where Harris landed multiple attacks on Trump’s fitness for office, his legal challenges, and his stance on key issues such as abortion.
Betting Odds Shift Post Debate
As a result of the debate, betting odds shifted in favor of Harris. Online betting site PredictIt showed a slip in Trump’s odds of victory by 6 cents, bringing his chances down to 47 cents on the dollar. In contrast, Harris saw her odds rise to 57 cents from 53 cents, following her strong performance during the debate.
The political stakes for Trump Media are high, as the company’s stock price is directly tied to Trump’s chances in the 2024 election. The company, which owns Truth Social, is highly popular among retail traders, many of whom are betting on Trump’s political comeback to drive the company’s success.
Political Sentiment Affects Trump Media Stock Price
The company’s valuation has always been volatile, given its deep connection to Trump’s political fortunes. Trump holds more than a 50% stake in Trump Media, which currently has a market value of $3.7 billion. The stock has dropped nearly 60% since mid-July, coinciding with Harris’ rise in the polls and her eventual replacement of President Joe Biden as the Democratic candidate.
Following the debate, market strategist Charu Chanana from Saxo Investment Platform highlighted that the debate had succeeded in shifting the balance toward one candidate, making the race even more competitive. This shift placed additional pressure on Trump Media’s stock, as the political landscape plays a significant role in the company’s stock performance.
Celebrity Endorsements and Market Impact
In addition to the debate, Harris’ candidacy received a further boost when pop superstar Taylor Swift publicly announced her support for the Democratic candidate on social media. Swift’s post to her 280 million Instagram followers served to bolster Harris’ image among younger voters and may have played a role in the market’s reaction to the debate outcome.
Matthew Tuttle, CEO of Tuttle Capital Management, emphasized that Trump Media stock has become a de facto “betting stock” for a Trump election victory. According to Tuttle, should Trump win, the stock is expected to grow as Trump would likely retain his shares in the company. Conversely, if he loses, the stock could face greater pressure as Trump may need to sell shares to cover his mounting legal bills.
Valuation Challenges and Market Volatility
Another critical factor weighing on Trump Media stock is its extremely high valuation compared to its revenue. The company posted revenues of $4.1 million in 2023, yet its market value exceeds 900 times this figure. To provide context, Meta Platforms (NASDAQ:META), a significantly larger company, generated $131.9 billion in revenue in 2023 and has a price-to-revenue ratio of 9.6, according to data from LSEG.
This disproportionate valuation has made Trump Media stock highly volatile, with shares exchanging hands rapidly. Nearly 5.8 million shares were traded within minutes of the market opening on Wednesday, almost matching its 25-day average volume.
Upcoming Shareholder Lock-Up and Future Uncertainty
Further market pressure could come from an upcoming shareholder lock-up expiry, which would allow Trump and other key investors to sell shares as early as next week. If the stock price remains at or above $12 for 20 consecutive trading days from August 22, Trump would be free to offload shares starting September 20. However, if this threshold is not met, the six-month lock-up period will expire on September 25.
The stock is currently trading at $16.09, but its future remains uncertain. The potential for additional shares entering the market could further depress the stock price, depending on election outcomes and market sentiment.
Conclusion
The decline in Trump Media’s (NASDAQ:DJT) stock reflects a broader market reaction to shifts in the 2024 presidential race. With Kamala Harris gaining momentum after the debate, investors are growing more cautious about the company’s future prospects. As Trump’s legal challenges mount and the political landscape evolves, Trump Media’s stock remains highly sensitive to election outcomes, leaving the company’s future hanging in the balance.
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