Since plunging to record lows last month, Trump Media & Technology Group stock has come roaring back, approaching the peak it set shortly after its Wall Street debut.
Shares of former President Donald Trump’s social media company rose nearly 9% Tuesday to $51.51 in a rollercoaster trading session that saw the stock halted several times due to extreme volatility.
The stock’s rally has padded Trump's fortunes. Trump Media now has a $10 billion market value, making Trump's stake worth about $6 billion.
Market observers say the stock’s rally in the final days before the election shows that traders are betting on Trump retaking the White House.
Traders bet on Trump odds of winning race
Polls indicate the race is deadlocked, but “the perception is that he is now winning,” Tuttle Capital Management CEO Matthew Tuttle told USA TODAY earlier this month.
Market research firm S3 Partners said Tuesday that the jump in Trump Media’s stock is closely tracking Trump's odds in the prediction and betting markets.
"DJT currently serves primarily as a proxy for the election, although its valuation is influenced by other factors as well," S3 partners said.
Trump Media 'exceptionally volatile'
Another driving force? The stock is rife with short-term speculators.
“DJT continues to be exceptionally volatile on a daily basis because there are speculators playing short-term momentum strategies. They buy when the price rises, pushing up the price even more,” said University of Florida finance professor Jay Ritter.
Meme stocks like Trump Media thrive on attention like Trump’s six-hour rally in New York City’s Madison Square Garden, which drew thousands of his supporters in red MAGA hats, Ritter said.
“The higher the price goes, however, the greater is its downside potential," he said. "This stock is incredibly risky.”
Trump Media does not trade on business fundamentals. It’s a small player in the world of social media, it’s losing money and it has nearly no revenue.
In August, it disclosed a net loss of $16.4 million on revenue of just under $837,000. The company has also been dogged by litigation and reports of management turmoil.
Trump is double-edged sword for Trump Media
Its major draw is Trump. Trump Media would become more valuable if the next president is the majority shareholder as the flagship product, Truth Social, is the GOP presidential nominee’s bullhorn of choice.
On the other hand, a loss to Vice President Kamala Harris could hammer the stock.
In regulatory filings, Trump Media, which trades under the vanity ticker DJT, has telegraphed how critical Trump is to the company’s brand, warning that its value “may diminish” if Trump’s popularity falters.