Donald Trump’s social media stock closes at record low after his bumpy debate performance

new York
CNN
—

Wall Street is acting as if Donald Trump had lost the debate on Tuesday night.

Investors were quick to punish Trump’s social media business after the former president’s widely criticized performance at the debate. Other so-called Trump trades, including bitcoin and Coinbase, went into reverse on Wednesday, while bonds and Asian currencies rallied. And some funds that own solar and other clean energy stocks rose sharply.

Shares of Trump Media & Technology Group plunged 17% on Wednesday to their lowest level since the Truth Social owner went public in late March, before ending the day at a record low of 10%.

The sharp sell-off is a direct reaction to the ABC presidential debate, in which Vice President Kamala Harris successfully destabilized Trump.

It’s the exact opposite of how Trump Media’s stock price reacted on June 28 following President Joe Biden’s disastrous performance at the CNN debate. Trump Media initially gained 10% that day before tailing off and ending in the red.

Trump Media has at times become an opportunity for traders to bet on Trump’s political fortunes and his chances of returning to the White House.

“The market assumes she won the debate,” Matthew Tuttle, CEO of Tuttle Capital Management, told CNN on Wednesday, citing shifts in Harris’ favor in betting markets overnight.

Not only is Trump Media’s largest shareholder, he is also the most popular user of Truth Social, the company’s only major product. The company’s stock symbol is even “DJT.”

“I think if he loses, he has to sell and DJT goes to $1. If he wins, he doesn’t sell and DJT can go,” Tuttle said.

The lock-up period preventing Trump from selling his 114.75 million shares of Trump Media stock expires later this month. While lifting the lock-up period will give Trump a chance to sell some shares, experts say it would be nearly impossible for the former president to quickly unload most or all of his holdings without the stock price crashing.

Michael Block, chief strategy officer and co-founder of AgentSmyth, told CNN that Trump Media’s sell-off on Wednesday appeared to be related to what investors observed during the debate.

“Given the lack of earnings and other quantifiable metrics, DJT is not exactly a traditional growth or value stock for investors,” Block said in an email. “DJT is a story stock and perhaps investors did not like the story President Trump told the world last night.”

Trump Media’s share price rallied ahead of the debate, rising 9 percent in the first two days of this week.

But overall, the stock has suffered badly in recent months, losing about half its value since Biden dropped out of the White House race in July. The owner of Truth Social fell last week to its lowest level since its IPO in late March.

The value of Trump’s stake in the company has fallen dramatically, from $6.2 billion on May 9 to around $1.9 billion on Wednesday.