Trump media (NASDAQ: DJT) shares posted big gains in trading Wednesday after the lockup period expired. The company’s stock was up 9.3% as of 11:30 a.m. ET. Shares had risen as much as 13.2% earlier in the daily session.
Trump Media went public in March through a merger with a special purpose acquisition company (SPAC), and insiders at the social media company were banned from selling stock for six months. The lockup period expired Friday, and an additional two-day period for insiders to report stock sales ended yesterday.
Trump Media Stocks Pass Lockup Expiration Test
So far, Trump Media hasn’t seen a wave of insider selling — and that’s good news for the stock. Investors were concerned that the expiration of the lockup period would be followed by a large amount of shares being sold on the market.
If insiders were to sell large blocks of shares, the company’s share price would come under enormous pressure. The potential sale by one shareholder in particular has come under scrutiny.
Donald Trump is the majority owner of Trump Media, owning about 60% of the company. Earlier this month, the former president and current presidential candidate said he had no plans to sell Trump Media stock. With early signs that the lockup expiration won’t be followed by a wave of shares hitting the market, the stock is posting big gains today.
What’s Next for Trump Media Stock?
In the second quarter, Trump Media posted a net loss of $16.4 million on revenue of just $828,000. The company ended Q2 with about $344 million in cash and zero debt, so its loss in the period isn’t a bad sign. However, there’s a lot of uncertainty about what will happen to the company next.
Right now, the cornerstone of Trump Media’s business is Truth Social — a social media platform similar to X, the platform formerly known as Twitter. Compared to major social media platforms, Truth Social has a small user base and posts uninspiring levels of monetization. Despite some positive catalysts related to the presidential election, it’s unclear whether the service is gaining meaningful traction.
With the stock still trading about 79% below its highs, it’s possible that Trump Media shares could continue to stage a rebound rally in the near term after fears about insider selling subside. But the company still hasn’t given investors a clear roadmap for what its expansion plans look like, and the stock remains a risky speculative bet.
Should You Invest $1,000 In Trump Media & Technology Group Now?
Before you buy shares in Trump Media & Technology Group, you should consider the following:
The Motley Fool Stock Advisor team of analysts has just identified what they think is the 10 best stocks for investors to buy now… and Trump Media & Technology Group wasn’t one of them. The 10 stocks that made the cut could deliver monster returns in the years to come.
Think about when Nvidia made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $740,704!*
Stock Advisor offers investors an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks each month. The Stock Advisor has service more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns as of September 23, 2024
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 Surging Today was originally published by The Motley Fool
