Trump’s social media stocks rise as America goes to the polls

new York
CNN
—

Former President Donald Trump’s social media company is booming on Election Day as it faces a pivotal moment that voters will decide.

Shares of Truth Social owner Trump Media & Technology Group rose 13% on Tuesday morning.

The rally builds on a 12% rise on Monday and represents a rebound after three days of steep losses last week.

Traders have been betting for months that a Trump victory could boost Truth Social’s value – although it would be very difficult to justify the current price even if Trump were back in the White House.

Trump Media is losing money and generating very little revenue. Its main product, the conservative social network Truth Social, remains tiny. Still, Trump Media has morphed into a billion-dollar meme stock and is a popular way for traders to bet on the end of this election campaign, driving up the net worth of its largest shareholder.

Some other elements of the so-called Trump trade also increased on Tuesday. Shares of major banks and Bitcoin rallied. This also applies to the private prison companies Geo Group and CoreCivic. The prediction markets have also shifted towards Trump.

Still, recent polls and prominent election models suggest that the race for the White House is a real coin toss that could go either way.

“I don’t know where the market gets its confidence from,” said Steve Sosnick, chief strategist at Interactive Brokers. “I think those who have favored the former president all along are a confident bunch, and this is their last opportunity to express that confidence before we learn whether it is justified.”

Matthew Tuttle, CEO of Tuttle Capital Management, told CNN on Tuesday that it was far too early to draw any conclusions from the rise in Trump media and other market moves.

“It is extremely early. I don’t think we’re seeing smart money here. “We see people throwing darts at a board,” Tuttle said.

There is a lot at stake for Trump Media, which operates under the stock ticker symbol “DJT.”

Although Trump Media only generated $1.6 million in revenue this year, the company’s value is nearly $8 billion based on Tuesday’s earnings. That means Trump Media’s market value is roughly equivalent to that of Paramount Global, a media conglomerate that includes CBS and has brought in more than $14 billion this year.

If Trump loses the election, Trump Media has little to fall back on. Venture capitalist Gene Munster recently told CNN that a Trump loss could cause Trump Media’s value to plummet to just $1 billion. Others think it could be worth even less.

“I wouldn’t touch DJT because I think the downside potential is zero and I’m not sure how much upside there is,” Tuttle said.

Trump owns 114.75 million shares of the company, making him the dominant shareholder. At current prices, these shares are worth about $4.5 billion. That’s a significant increase from $1.4 billion on Sept. 23, when Trump Media closed at a record low.