By Michelle Conlin
NEW YORK (Reuters) – Trump Media’s (DJT) rollercoaster ride has served as a proxy of sorts for Republican presidential candidate Donald Trump’s election chances. Now traders are finally on their day of reckoning.
Trump Media stock fell 4% before the bell on Monday.
Traders and investors say the stock is at risk of extreme volatility after the outcome of Tuesday’s election is announced, with trading disconnected from daily business fundamentals. The company operates the Truth Social media platform and has launched a streaming service.
“This stock is insanely overvalued and the economy makes no sense even if Donald Trump is elected,” said Brian Lukow, a former senior vice president of Lehman Brothers and film producer who is now shorting stocks, a bet that the price of a stock will fall. In Trump Media, he thinks he has found his next best bet, if Democratic candidate Kamala Harris wins.
For the second quarter, Trump Media reported a loss of $16.4 million and revenue of $837,000. The company has a market capitalization of approximately $6 billion.
“Stocks will crash and burn if Harris pulls off a win,” said Lukow, who said he will continue to maintain his short position. “If Trump wins, this bet looks like the biggest bet he has ever made.”
For weeks, the rise in Trump Media shares has been accompanied by Trump’s surge on election betting sites such as Polymarket, where odds of the Republican’s victory rose as high as 67%.
The move has caught the attention of social media users and online gambling experts because it involved some big bets from a Paris-based trader and deviated sharply from opinion polls that had deadlocked the race.
However, when Trump Media’s stock fell sharply last week, Trump’s chances on Polymarket fell as well. On Sunday, Trump’s chances were about 54%.
There is no formal analyst coverage of Trump Media, which is 57% owned by Trump himself. According to Reuters calculations, the former president’s stake in the company is worth $3.5 billion. According to Forbes magazine, Trump’s total net worth is $5.6 billion as of Sunday.
The Trump campaign referred questions to Trump Media & Technology Group, the company’s full name. TMTG did not respond to a request for comment.
Trading startups
Trump Media stock has a fervent online following, including those who identify themselves as Trump supporters and pledge to hold the stock for the long term. The stock’s staunchest proponents often post publicly on Reddit and Truth Social, including in a group called $DJT, whose online banner is a rocket shooting into space.
