Shares of Trump Media & Technology Group (NASDAQ: DJT) sinking in Wednesday’s trading. The stock was down 13.2% as of 11:30 a.m. ET today, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500 index fell by 1.2% and the Nasdaq Composite index fell by 0.7%.
Trump Media shares are falling after last night’s presidential debate between Donald Trump and Kamala Harris. Fresh inflation figures and concerns that company insiders could soon sell their shares after a lockup expires are also weighing on the company’s valuation. Today’s sell-off has pushed Trump Media shares to a new all-time low.
The debate and the inflation data
Donald Trump is the majority owner of the company, and the stock has often moved in tandem with perceptions surrounding the outlook for the current presidential race. Some investors were likely hoping that last night’s debate would be a bullish catalyst for the stock that could reverse the selling pressure ahead of the looming lockup expiration.
With the post-debate bullish momentum not realized and a large number of stocks set to be sold on the open market soon, investors are feeling pessimistic today. And new economic data isn’t helping.
The latest core data from the U.S. Department of Labor’s Consumer Price Index (CPI) showed a monthly increase of 0.3% in August, beating expectations for a 0.2% increase. While other inflation data looked more promising, the core CPI data is raising concerns.
The new data makes it more likely that the Federal Reserve will implement a 25 basis point rate cut instead of the 50 point cut that some investors were hoping for. As a result, the broader market is under negative pressure today, with some growth stocks and speculative plays seeing excessive sell-offs.
What’s Next for Trump Media Stock?
In the short term, the next big test for the stock will likely be the expiration of its lockup period. Trump Media went public in March via a merger with a special purpose acquisition company (SPAC), and insiders have been unable to sell their shares because they are still relatively new to the market.
The lockup that prevents insider selling expires on September 25, but could happen as early as September 20. If Trump and other company insiders sell a large number of shares, the stock price could plummet. On the other hand, if the lockup expiration is followed by a relatively small amount of insider selling, the price could rise significantly.
In the long term, there is still a lot of uncertainty surrounding Trump Media. The company has launched new services in video streaming and a content delivery network, but the Truth Social media platform remains the core of the business and has generated revenue at a low level.
With little visibility into how the company plans to scale its operations and uncertain political catalysts looming, the stock is likely to remain highly volatile in the coming months.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Trump Media Stock Is Dropping Today was originally published by The Motley Fool
