Home Latest Insights | News Shares of Trump Media Drop to A New Low Following His Return to X

Shares of Trump Media Drop to A New Low Following His Return to X

Shares of Trump Media Drop to A New Low Following His Return to X

Trump Media, the parent company of Truth Social and a significant holding for former President Donald Trump, has seen its share price decline, marking a notable low since it began public trading in March.

On Tuesday, shares under the ticker DJT fell to $17.89 per share, a sharp drop from its previous low of $19.38 on August 28. By the close of trading on Wednesday, DJT ended at $18.08 per share, down over 7% for the day.

This decline reflects a staggering 77% drop from its peak of $79.38 per share on March 26, following the company’s merger with a publicly traded special purpose acquisition company (SPAC). The fall coincides with a broader market downturn, particularly in the tech sector, where the Nasdaq fell by 3.26%, the Dow Jones Industrial Average by 1.51%, and the S&P 500 by 2.12%.

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However, while market trends have contributed to the downward movement, the recent sharp drop in DJT shares has also been linked to Trump’s return to X (formerly Twitter). As the presidential election draws near, Trump’s re-engagement with the platform signals a strategic move to reach a broader audience, potentially diverting attention from Truth Social, the social media platform he helped launch as a direct competitor to X.

Trump’s return to X comes at a critical time for both his political ambitions and the fortunes of Trump Media. Truth Social was created as an alternative platform following Trump’s ban from major social media networks in the wake of the January 6 Capitol riots. The platform has been central to his communication strategy with his base, offering a space where his messages could be broadcast without the restrictions imposed by other platforms.

However, Trump’s reappearance on X has raised eyebrows, given his previous vow to remain exclusive to Truth Social—in the aftermath of the January 6th Capitol riot which led to his social media ban. Trump launched Truth Social as a haven for free speech, promoting it as the only platform where he would engage with his followers.

For months, the former president was active solely on Truth Social, posting frequently and using it as his primary communication tool with his base. The platform became a central part of his post-presidency brand, serving both his political ambitions and business interests. His commitment to Truth Social was so firm that he publicly stated he would never return to Twitter, even if invited back.

As Trump returns to X, some investors may be concerned that Truth Social’s relevance and user engagement could wane, leading to a further decline in DJT’s stock price.

The stock’s decline also comes just weeks before Trump and other major shareholders are permitted to sell their shares. Currently, they are restricted by a “lockup agreement,” set to expire on September 25. This agreement could be moved up to as early as September 20 if the stock price remains above $12 per share for 20 trading days within a 30-day period that began last Friday. Trump’s nearly 59% ownership in DJT, valued at over $2 billion as of Tuesday, adds further complexity to the situation.

Speculation is rife about whether Trump will cash in on his shares, given the considerable financial pressures from his campaign expenses and ongoing legal battles. Should Trump choose to sell, it could exacerbate investor concerns, potentially triggering a broader selloff and further depressing the stock’s value.

However, Trump’s return to X has fueled speculation about the future of Truth Social, a platform whose success is closely tied to his active participation. The market seems to have responded to this development, with investors interpreting Trump’s activity on X as a potential sign of waning confidence in Truth Social.

As speculation swirls about whether Trump will sell his shares, especially given his campaign expenses and ongoing legal battles, investors are on edge. A selloff by Trump could intensify doubts about the company, potentially triggering a broader stock selloff.

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