Finance

Truth Social’s stock price soars, and it’s not just Trump supporters who are buying.


more than two years After the announcement Following the merger, Trump Media, the parent company of Donald Trump’s social media platform Truth Social, listed on the stock market on Tuesday under the stock symbol DJT.

investor crazy.

The stock has been boosted by Trump supporters and retail investors looking to make a quick buck as the stock price surges. At one point on its first day, Trump Media’s stock price was up nearly 60%, and there was plenty of tug-of-war. causing the Nasdaq stock exchange to temporarily suspend trading.

Meme stocks have also gained attention as a way to counter hedge funds, which have been shorting or betting against companies like GameStop. Other investors are just there to make money. But whatever the motivation for buying, experts warn of the risks associated with these volatile bets.

Now, like these meme stocks, experts say they expect Trump Media to have a tumultuous ride.

“If you’re an investor looking for stable returns, I wouldn’t touch this with a 10-foot pole,” said Derek Horstmeyer, a finance professor who specializes in corporate finance at George Mason University in Virginia. explain.

This photo illustration shows an image of former President Donald Trump reflected on a phone screen displaying the Truth Social app.

This photo illustration shows an image of former President Donald Trump reflected on a phone screen displaying the Truth Social app.

for money

Mitchell Standley bought the first shares of Digital World Acquisition, a publicly traded shell company that went public after merging with Trump Media, back in early 2022.

Standley, 39, of Chandler, Arizona, has been active on Reddit’s Wall Street Bets subreddit for months and saw an opportunity to profit from the stock given the former president’s fan base.

“I saw how ruthless his followers were and I thought I’d give it a try. I ended up making a lot of money,” he said.

Mitchell Standley bought the first shares of Digital World Acquisition, a publicly traded shell company that went public after merging with Trump Media, back in early 2022.Mitchell Standley bought the first shares of Digital World Acquisition, a publicly traded shell company that went public after merging with Trump Media, back in early 2022.

Mitchell Standley bought the first shares of Digital World Acquisition, a publicly traded shell company that went public after merging with Trump Media, back in early 2022.

His timing on the bet was perfect; when he exited just four hours later, his $750 investment brought his investment to about $4,500.

When Digital World’s stock price began to climb ahead of its merger with Trump Media, Standley decided to try his luck on the stock again.

Adopting a more advanced investment strategy, he purchased two “calls” on the company last week: one for $100 and the other for just over $160. He said both options could easily be sold off due to high demand for the shares. Walked away with over $3,000 in profits.call option Gives investors the right, but not the obligation, to buy shares at a specific price. )

DJT had a great first day: Trump’s truth, social media stocks rise rapidly

Standley, a registered independent, said he had no political motivation for investing in Trump’s social media company.

“I play the markets for money, not for politics. But of course I follow politics because I see how committed his followers are,” he said. “So when I see something like this, I’m glad it’s a no-brainer.”

Online forums on sites like Reddit are filled with people like Stanley who have no intention of holding on to their investment in Truth Social.

“We know from the meme stock craze that whenever there’s a bubble, it tends to attract a lot of other, more rational investors who are just looking to realize huge gains, even if they have no real interest in the company in the long run,” explain Albert Tsaiprofessor of law at the University of Michigan.

Invest in Trump

Other Trump media investors, like Terry Lynn Robertson, couldn’t care less about the potential gains.

Robertson, 52, of the Dallas-Fort Worth metropolitan area in Texas, said she bought five shares of Trump Media stock at about $72 a share, right around the stock’s peak on Monday.

But she calls the venture “all fun and games.” To her, it’s more about messaging than anything else.

Teri Lyss Roberson said she bought stock in Trump Media, the parent company of Truth Social, to show her support for Donald Trump.Teri Lyss Roberson said she bought stock in Trump Media, the parent company of Truth Social, to show her support for Donald Trump.

Teri Lyss Roberson said she bought stock in Trump Media, the parent company of Truth Social, to show her support for Donald Trump.

“It’s mostly about supporting Trump and his legal battle. Or making a statement,” she said, “but more just to show that people support him.”

Robertson said the only time she tried investing was during the early days of the COVID-19 pandemic, when the cruise industry was in a downturn. at a standstillShe bought Royal Caribbean stock to show her support.

Robertson said she’s not worried if her Trump Media holdings don’t deliver returns. She plans to hold the shares — at least until the 2024 presidential election — and “see where it goes.”

Such investments helped give Trump Media a market value of nearly $8 billion at Tuesday’s close.

“I don’t think the company’s fundamentals are strong enough to justify this valuation.” Usha Rodriguez, “There’s definitely a lot of investor interest because they have the opportunity to invest in the Trump brand,” said the professor at the University of Georgia School of Law who specializes in corporate finance and securities law.

The company has racked up tens of millions of dollars in losses, sales are sparse, and has struggled to attract advertisers and users since launching in 2021.

Is Truth Social the next GameStop?

Predicting where the stock market will go is not easy, but most experts agree Trump’s media will continue to see volatility.

“It’s going to be like GameStop, where it goes up, then goes down like crazy, then goes up again,” said George Mason University’s Horstmeyer.

That’s because the stock’s performance so far isn’t based on traditional metrics — investors are “just going with the flow,” he said.

That kind of volatility could pay off for investors like Standley and even Trump himself, whose net worth soared after Trump Media went public.As of Tuesday afternoon, the former president was worth about $4.5 billion on paper, This is thanks to his approximately 60% stake in the company.

For others, it can lead to losses. The stock has already experienced a significant drop, falling from about $72 to less than $58 in the closing hour on Tuesday.

Rodriguez of the University of Georgia said that as long as investors put money into stocks that rise due to the actions of other investors rather than the performance of the company, they “run the risk of losing money.”

This article originally appeared in USA Today: Truth Social’s stock price rises, who is investing in Trump’s platform?



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