A week ago, market observers (and political idiots) were wondering how low Trump Media (Nasdaq: DJT) stock would go. But despite long-standing fears of insider selling and a steady decline in the company’s stock price for ten days, Trump Media’s DJT shares have been surging lately.
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While the stock is still well below its 52-week high of $79.38, stock prices of Truth Social’s parent company are up about 30% in the past week. The stock has recovered from a 52-week low of $11.75 on September 24 to over $16 on Monday. And shares closed slightly again on Tuesday.
What’s driving the trades – and what caused the shift in sentiment? Here’s what you need to know.
Why have investors become bullish on Trump Media stock?
A large portion of Trump Media’s shares are owned by individual investors, many of whom are fans of Trump himself. So for the most part, they’re consistently optimistic about the company. But the recent rise in stock prices appears to be a sigh of relief for many as Trump has kept his promise not to sell his shares in the company.
Trump pledged on September 13 to keep his 114.7 million DJT shares, which represent a more than 56% stake in Trump Media and are worth about $1.9 billion. Still, there was some concern among shareholders. Now that the lock-up period is long gone (he was able to sell shares as of September 19), that nervousness is subsiding and that’s pushing people to buy more, pushing the price up.
Are there insiders who have sold their DJT shares?
Trump held on to his shares, but some insiders did not hesitate to sell when they had the chance. After the lockup ended in September, United formed Atlantic Ventures, a former partnership Student participants Andrew Litinsky and Wes Moss sold 11 million shares, virtually all of their holdings. That represented 5.4% of the total shares in Trump Medias.
Are short sellers driving up Trump Media’s stock price?
That is unclear, but it is certainly possible. Traders who were counting on the company’s share price to continue to fall amid the sell-off (by borrowing shares to sell and buy back at a lower price) may have run into deadlines to return them, which could have hurt the share price can stimulate.
Short positions as of September 13 (the number of shares shorted) were 14.5 million, more than double the number of short sellers Trump Media saw when it began trading publicly in March.
To what extent does the election play a role in the rise in DJT’s share price?
It is difficult to separate Trump Media from candidate Trump, even for investors. The fact that the elections in certain critical swing states are still essentially a dead heat is fueling optimism on both sides. Trump’s meeting with Ukrainian President Volodymyr Zelensky last week may have been seen as a positive sign by the Trump Media bulls.
Is Trump Media Insider Selling Over?
That is literally the million-dollar question. Despite insisting he has no plans to sell his shares, Trump has been known to change his mind without warning. Selling now, however, could be a bad political move, as Trump Media supporters might feel left behind if he increases his personal wealth (or uses the stock to do any of it) just weeks before the election many large judgments he faces).
Meanwhile, there is also the lingering question about Patrick Orlando’s intentions. Orlando’s ARC Global Investments sponsored the SPAC that merged with Trump Media, and he recently won a case against Trump Media, with a judge ordering the company to deliver a larger stake in the company to Orlando, saying TMTG had breached its contract with ARC violated.
Orlando has expressed no intention to sell his shares, but he no longer has a role at the company, which could worry some investors.
This post originally appeared on fastcompany.com
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