In a significant market shift, shares of Donald Trump's media company experienced a 15% decline in premarket trading on September 11, 2024. This downturn followed a presidential debate where Democratic candidate Kamala Harris demonstrated a strong performance against the Republican contender.
The debate, reminiscent of the first televised presidential face-off between John F. Kennedy and Richard Nixon in 1960, saw Harris effectively challenging Trump on various issues. She addressed concerns about his fitness for office, stance on abortion restrictions, and ongoing legal challenges. Trump's responses were notably filled with inaccuracies, reflecting the heightened tension of the encounter.
Trump Media & Technology Group (TMTG), which owns Truth Social, has seen its stock value fluctuate in correlation with Trump's perceived election chances. The platform, launched on February 21, 2022, following Trump's ban from Twitter on January 8, 2021, has become a barometer for his political fortunes.
"At this point, DJT is the betting stock for Trump winning."
The company's market valuation, currently at $3.7 billion, represents over 900 times its 2023 revenue of $4.1 million. This stark contrast becomes evident when compared to Meta Platforms, which has a price-to-revenue ratio of 9.6 based on its $131.9 billion revenue in 2023.
Harris' campaign received an unexpected boost from pop star Taylor Swift, who endorsed the Democratic candidate to her 280 million Instagram followers. This move echoes Swift's first public political endorsement in 2020, highlighting the growing influence of social media in political campaigns since 2008.
The upcoming shareholder lock-up expiry for TMTG adds another layer of complexity to the situation. If the stock price remains at or above $12 for 20 trading days from August 22, 2024, Trump and other investors could potentially sell shares as early as September 20, 2024. Otherwise, the six-month lock-up expires on September 25, 2024.
As the November 5, 2024, election approaches, the intertwining of TMTG's financial future with Trump's political prospects becomes increasingly apparent. The outcome of the election could significantly impact the company's trajectory and Trump's financial decisions regarding his shareholding.