Trump Media & Technology stock rises 22% in post-RTO enthusiasm

A day after Donald Trump’s social media company Trump Media & Technology Group [NASDAQ:DJT] started trading on Nasdaq in its new and expanded form, shares continued to grab headlines and traders’ interest. They opened 22% higher on Wednesday, up from a 16% rise on Monday.

TMTG, home of Truth Social, the social media platform Trump launched after being banned from Twitter, now X, restarted trading on Nasdaq on Tuesday following the merger with Digital World Acquisitions Corp., a special purpose acquisition company formed and listed in 2021.

The first 24 hours of trading have been colourful, to say the least. TMTG shares which trade under the ticker DJT, Trump’s initials, rose as high as $79.38 in the first trading session, up from the previous day’s close of $49.95, but then came down to close the day’s trading up 16% at $57.99. Trading was so volatile that it was halted for several minutes at a time while on Wednesday some traders mistook the company’s ticker for Dow Jones Transportation Average Index, which trades at over $15,000.

This morning the stock was the third most-trending stock on retail trader-focused trading platform Stocktwits and the 10th most-traded on the Nasdaq.

Do the numbers add up for TMTG?

If it were any other firm, we at The Armchair Trader would firstly take a look at the company’s earnings data to analyse where the stock might be going. Taking yesterday’s trading high of just under $80 per share the company’s market capitalisation of above $10 billion doesn’t really tally with its operating loss of $10.6 million in the first three quarters of 2023 and a revenue of $3.4 million.

But the political and legal froth that surrounds Trump himself will obscure any clear view of how the company is really doing. For instance, TMTG has plans to expand into live streaming next year and has other plans to build the business. However, with Trump owning a 58% stake in the company, the stock could as easily move on a tweet/one-liner from Trump as it could from actual business expansion.

The coming days could be a rollercoaster of a ride, with traders keeping one eye on the share price and the other on political events in the US.

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US media are filled to the brim with Trump headlines as the former US president keeps a comfortable lead in the voting polls ahead of Joe Biden. At the same time, news about different legal cases against Trump does not seem to be abating. For instance, at the end of February a New York judge ruled that Trump must pay $354.9 million in penalties for fraudulently overstating his net worth to mislead lenders.

In conclusion, TMTG is not one for the faint-hearted. There is a lot of scope for this stock to go up, particularly between now and the end of the year when US elections are taking place, but the froth could also be removed very quickly and without much warning.

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