Shares of Donald Trump’s company, Trump Media & Technology Group (DJT), plummeted in trading on Wednesday following a heated presidential debate between candidates Kamala Harris and Donald Trump. As a result, the decline in DJT stock came as the odds of Harris winning the election appeared to increase. This shift occurred because Harris challenged Trump on various issues, including his legal troubles and stance on abortion, which led to Trump delivering several false rebuttals.
Interestingly, DJT operates the social media platform, Truth Social.
DJT Stock Remains Sensitive to Trump’s Political Prospects
Given this context, DJT, which is popular among retail investors, remains highly sensitive to Trump’s political prospects. Additionally, Trump holds more than a 50% stake in the company, which currently boasts a market cap of $3.16 billion. Since mid-July, DJT has experienced a nearly 60% decline as Harris’ chances of winning the U.S. elections improved after she replaced Joe Biden as the Democratic candidate.
In light of this, a Reuters report, citing data from online betting site PredictIt, noted that odds for Trump’s victory dropped to $0.47, while Harris’ odds climbed to $0.57 from $0.53 earlier.
Trump Media Is Overvalued
Meanwhile, the Reuters report highlighted that Trump Media is grossly overvalued, with its valuation being 900 times its FY23 revenues of $4.1 million. In stark contrast, the report pointed out that social media giant Meta Platforms (META) has a price-to-revenue valuation of 9.6.
DJT Stock Continues to Plummet
Adding to the woes, shares of Trump Media have plummeted more than 76% from their peak in March, following its reverse merger with a blank-check firm. This type of merger allows a private company to go public by acquiring a majority of shares in a public company, bypassing the traditional IPO process.
Furthermore, there could be additional downward pressure on the shares as the shareholder lock-up period of six months is set to expire on September 25 for Trump and other investors. According to the report, if the stock remains above $12 for 20 trading days, Trump may begin selling DJT shares starting from September 20.
Is DJT Stock a Buy?
None of the Wall Street analysts are covering DJT stock. Year-to-date, DJT has declined by more than 10%.
