Trump-associated Media company's share value inexplicably declines.
Truth Social's parent company, Trump Media & Technology Group, saw a significant surge during a turbulent market, reaching around $31 per share at approximately 2:40 p.m. ET. However, a swift downturn followed, dropping below $29 shortly afterwards on high trading volume.
The Nasdaq temporarily halted trading for Trump Media at 2:42 p.m. ET for a customary five-minute break, a protocol required during periods of intense volatility.
Upon resumption, Trump Media experienced a brief rebound before diving below $27 once more. The day concluded with a 10% loss for the social media platform owner, falling 20% from its highest point of the day.
No discernible reasons for the sudden drop were identified, but Trump Media's unpredictable stock behavior is well-known.
Matthew Tuttle, CEO of Tuttle Capital Management, suggested that the drop was stemmed from technical factors. Upon Trump Media's share price failing to surpass its 200-day moving average, a frequently watched technical level, traders began to bet against it.
Up until 2:40 p.m. ET on Tuesday, Trump Media had been thriving.
The stock had skyrocketed more than double its initial value within a three-week span, attributable to polling and betting market speculations indicating a potential tie in the White House race.
"Sometimes, the bottom drops out of these kinds of rallies pretty swiftly," said Tuttle in an email.
The University of Florida's Jay Ritter noted that the trading volume in Trump Media shares was remarkably high on Tuesday.
"With meme stocks, where many investors rely on short-term momentum strategies, when the tide shifts, everyone tends to move in the same direction," Ritter explained, categorizing Trump Media as a meme stock similar to GameStop and AMC.
Ritter pointed out that while it's unusual for a multibillion-dollar company to plummet like this without any news, meme stocks tend to experience dramatic shifts due to their reliance on momentum and not fundamental analysis.
At the peak of trading on Tuesday, Trump's stake of 114.75 million shares in the company was worth an estimated $3.88 billion. By the end of the day, the value of this stake had reduced to $3.1 billion.
This is the second recent trading halt to impact Trump Media. Last month, Trump responded forcefully to Nasdaq's routine action, indicating a potential move of Trump Media's listing to the New York Stock Exchange.
Trump Media shares rebounded by 2% during after-hours trading.
After a remarkable three-week rise, Trump Media had been consistently performing well in the business sector.In the midst of this prosperity, the stock had significantly surpassed its initial value, bringing Trump's stake worth to an estimated $3.88 billion at its peak on Tuesday.
