Trump Media Shares Plunge 10% Following Debate with Kamala Harris

Shares of Trump Media & Technology Group (TMTG), the media company founded by Donald Trump, dropped sharply by 10.5% after the debate between Trump and his presidential opponent, Kamala Harris. The decline represents the company’s largest one-day drop since late June, and the company’s market capitalization now stands at $3.3 billion (US), or approximately $4.9 billion AUD. This significant decrease continues a longer-term slump, which has wiped out approximately $6 billion in market value since May. 

Impact of Debate Performance on Stock Price 

The stock's latest decline coincided with a shift in market sentiment regarding Trump’s election prospects. Betting markets such as PredictIt, which track the likelihood of political outcomes, showed that Trump’s chances of winning the upcoming presidential election dropped to 48% after the debate. Market participants interpreted this as an indicator of Kamala Harris’s stronger debate performance. Matthew Tuttle, Chief Investment Officer at Tuttle Capital Management, remarked on the situation, stating that the market seemed to view the debate as a win for Harris, which led to Trump’s stock declining. 

TMTG operates Truth Social, a social media platform promoted as a conservative alternative to major social networks, with Donald Trump being the company’s largest shareholder. TMTG went public earlier in the year through a merger with a special purpose acquisition company (SPAC), a trend that has been common for companies looking to raise capital and enter the public markets quickly. 

Volatility Tied to Election Prospects 

TMTG’s stock has displayed volatility, often trading in correlation with Donald Trump’s political fortunes. At various points, the stock surged or plummeted based on the former president’s electoral odds, as seen when there was a sharp increase in his chances of reelection after an assassination attempt in July. The stock has also exhibited characteristics of a meme stock, with dramatic price swings unrelated to any fundamental changes in the business, indicating that investor sentiment, political news, and social media buzz play a major role in determining the stock’s performance. 

This correlation with Trump’s political prospects has created a complex trading environment. When betting markets or polling data signal positive news for Trump’s campaign, the stock often rises. Conversely, any setbacks, such as perceived debate losses, result in sell-offs. TMTG shares are now nearly 75% below their high in March, reflecting the recent downward trend. 

Financial Challenges and Lockup Expiratio 

Adding to the company’s challenges, Trump Media remains unprofitable. Since its inception, TMTG has faced numerous operational and financial difficulties. The stock’s eight-week decline highlights the financial pressures and the market’s concerns about the company’s future.  

Additionally, another headwind for the company looms in the form of an upcoming lockup period expiration. A lockup period is a restriction that prevents company insiders from selling shares for a set period after an IPO or SPAC merger. For TMTG, this lockup period is set to expire as early as September 19, allowing major shareholders, including Donald Trump, to sell their shares. If insiders start selling large amounts of stock, it could further weigh down the company’s already-declining share price. 

The expiration of the lockup period adds uncertainty for investors, as large insider sales could signal a lack of confidence in the company’s future or lead to an oversupply of shares on the market, further depressing prices. However, until the lockup expires and actions are taken, it remains unclear whether significant amounts of shares will be sold. 

Broader Market Trends 

TMTG’s price decline also comes amid broader concerns about the social media and tech industries. Truth Social, the company's flagship platform, aims to attract users by positioning itself as an alternative to mainstream platforms like Facebook and Twitter. However, competition in the social media space remains fierce, with established platforms continuing to dominate user bases and advertising revenue. 

TMTG has faced significant obstacles in scaling its platform, and with the volatile nature of its stock price, it has become a focal point for speculation. Investor uncertainty has been compounded by the company’s lack of profitability and its reliance on Trump’s political success. 

Future Outlook 

As TMTG navigates these challenges, the stock will likely continue to be influenced by political events, particularly those surrounding Donald Trump’s presidential campaign. The expiration of the lockup period and the company’s financial health will also be critical factors to watch in the coming weeks. 

While the debate fallout has had an immediate negative impact on TMTG’s stock price, future developments in Trump’s campaign and broader market conditions will play a significant role in determining the company’s trajectory going forward. The combination of political volatility, insider sales, and business performance creates an uncertain landscape for the company and its investors.