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Trump Media stock rose for a second consecutive day on Wednesday as the company, majority-owned by Donald Trump, attempted to recover losses from a significant sell-off that occurred after the expiration of insiders’ lockup agreements.
The stock of DJT was up by as much as 7% shortly after the market opened, trading above $13.70. On Tuesday, Trump Media closed more than 5% higher. This uptick followed a prolonged decline that significantly diminished the company’s market capitalization by billions of dollars.
Earlier this week, Trump Media shares closed at their lowest level since the company went public approximately six months ago, following its merger with a blank-check firm. Despite this, the company, which has a market cap exceeding $2.5 billion, is viewed by some experts as overvalued.
Analysts suggest that retail investors are trading Trump Media stock not based on the business’s fundamentals—such as the reported $837,000 in revenue for the latest fiscal quarter—but rather as a means to wager on Trump’s political prospects as the Republican presidential nominee. The stock experienced a brief surge in mid-July, after Trump narrowly escaped an assassination attempt at a campaign rally and seemed to be strengthening his lead over President Joe Biden. However, the stock began to decline after Vice President Kamala Harris replaced Biden and quickly reduced Trump’s lead in the polls, resulting in a 70% drop from July 15 to Monday.
The decline continued as the expiration of lockup agreements approached, which had prohibited Trump and other company insiders from selling their shares. The expiration, which occurred on Thursday afternoon, led to a significant increase in trading volume, much higher than the 30-day average, according to FactSet.
Trump holds 114,750,000 shares, representing nearly 57% of the company, valued at approximately $1.5 billion as of Wednesday morning. If Trump were to sell his shares, it could undermine investor confidence and potentially trigger another sell-off. However, prior to the expiration of his lockup agreement, Trump announced he had no intentions of selling his shares. As of now, no other insiders from Trump Media have reported any transactions to the U.S. Securities and Exchange Commission, as is typically required.
The company’s regulatory filings indicate that its sole product, Truth Social, relies heavily on Trump’s popularity and active use of the social media platform.
This story is developing. Please check back for updates.
