The firm operates the Truth Social media platform and has launched a streaming service
Trump Media’s roller-coaster share price has served as kind of a proxy for Republican presidential candidate Donald Trump’s chances of election. Now traders are finally at their day of reckoning.
Trump Media stock dropped 6% before the bell on Monday.
Traders and investors say the stock is at risk of extreme volatility after the result of Tuesday’s election is known, with its trading detached from its day-to-day business fundamentals. The firm operates the Truth Social media platform and has launched a streaming service.
This stock is insanely overvalued and the economics make no sense whatsoever, even if Donald Trump is elected, said Brian Lukow, a former Lehman Brothers senior vice president-turned-movie producer who now shorts stocks, a bet that the price of a stock will drop. In Trump Media, he thinks he has found his next best bet, if Democratic candidate Kamala Harris wins.
For the second quarter, Trump Media reported a loss of $16.4 million and revenue of $837,000. The company has a market cap of nearly $6 billion.
The stock is going to crash and burn if Harris pulls out a victory, said Lukow, who said he continues to hold his short position. If Trump wins, then this bet looks like the greatest bet he’s ever made.
For weeks, the rise in Trump Media stock has come in tandem with Trump’s rise on election betting sites like Polymarket, where the odds of the Republican’s chances of winning increased as much as 67%.
This movement has drawn scrutiny from social media users and online gambling experts because it came alongside some large bets from a Paris-based trader and diverged sharply from opinion polls, which have had the race in a dead heat.
Last week, as Trump Media stock declined sharply, however, so did Trump’s chances on Polymarket. On Sunday, the odds had Trump at nearly 54%.
There is no formal analyst coverage of Trump Media, which is 57% owned by Trump himself.
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