Donald Trump's shares in the social media sector are experiencing a significant decline following his troublesome debate display.
Investors swiftly criticized Trump's social media enterprise after the ex-president's poorly received debate performance. Other so-called Trump-related investments, such as bitcoin and Coinbase, saw a reversal on Wednesday, while bonds and Asian currencies celebrated. Additionally, funds focused on solar and other clean energy stocks experienced significant increases.
Trump Media & Technology Group shares experienced a 10% drop in premarket trading on Wednesday, indicating a potential opening at the lowest point since the firm behind Truth Social went public at the end of March.
The sharp decline is a direct response to the ABC presidential debate, during which Vice President Kamala Harris effectively disrupted Trump's performance.
Contrasting this with Trump Media's share price response on June 28 following President Biden's poor showing in the CNN debate, the stock initially surged 10%, only to ultimately end in the red.
Trump Media has often served as a platform for traders to speculate on Trump's political success and potential return to the White House.
Matthew Tuttle, CEO of Tuttle Capital Management, remarked to CNN on Wednesday, "The market seems to believe she won the debate." Citing shifts favoring Harris in the betting market after the debate.
Trump is not only the major shareholder in Trump Media; he's also the most popular user on Truth Social, the company's primary product. Its stock ticker symbol is "DJT."
Tuttle continued, "If he loses, he'll sell, and DJT goes to $1. If he wins, he doesn't sell, and DJT has potential to do well."
The lock-up restrictions preventing Trump from selling his 114.75 million shares in Trump Media are set to expire later this month. The dissolution of the lock-up agreement allows Trump to sell a portion of his shares, but experts believe it would be near impossible for him to quickly get rid of the majority or all of his stake without significantly impacting the share price.
Michael Block, chief strategy officer and co-founder of AgentSmyth, told CNN that Trump Media's drop on Wednesday seems tangentially related to the debate.
"Given its lack of earnings and other quantifiable metrics, DJT is not the typical growth or value investment for investors," Block explained in an email. "DJT is a narrative stock, and perhaps investors weren't thrilled with the narrative Trump presented during the debate."
Trump Media's stock price experienced a rally in the days leading up to the debate, increasing by 9%.
However, in the broader context, the stock has struggled significantly in recent months, shedding about half its value since Biden withdrew from the presidential race in July. The owner of Truth Social plummeted to its lowest point since its March debut last week.
The value of Trump's stake in the company has dropped dramatically, going from $6.2 billion on May 9 to $1.8 billion, based on Wednesday's premarket trading price.
Investors might reconsider their business strategies with Trump Media & Technology Group, given the negative impact of the debate performance on its shares. This situation could potentially lead to reduced investing opportunities in the company.
Following the debate, there might be a shift in investing strategies towards other promising ventures, as investors show less enthusiasm for Trump-related investments.
