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Markets and cryptocurrencies soared to new heights after Donald Trump secured a second term at the White House. But one stock, which bears the president-elect’s name, hasn’t gotten the same boost in the month since Election Day.
Shares of Trump Media and Technology Group, the company that owns President-elect Trump’s social media platform Truth Social, have bounced from red to green and back in the past month. Since Nov. 5, the stock has inched up 2%. As of Wednesday, shares traded at around $35 each, bringing Trump Media’s market capitalization to nearly $7.6 billion.
That’s down from pre-election highs of $51.51 — a more than 30% plunge since late October.
“It was a betting market push before the election, and what could be happening now is a sort of mean reversion back to whatever the fair value is,” said Michael Ewens, professor of finance at Columbia Business School.
The lead-up to Election Day saw the value of Trump Media’s shares skyrocket roughly 180% in just six weeks, notching the company’s biggest gains since debuting on the Nasdaq on March 26 following the completion of its merger with Digital World Acquisition Corp. (DWAC) (DWAC), a special purpose acquisition company, or SPAC.
Beyond the inherent volatility of Trump Media stock, which became something of a proxy for Trump’s odds heading into the election, there are now more concerns about Truth Social’s ability to remain competitive, Ewens said. That is particularly true given Trump’s increasingly close relationship with X (formerly Twitter) owner Elon Musk.
“It’s possible that, since the election, investors believe that his social network is in a battle,” he said. “Perhaps because he’s going to be president, perhaps because he’s friends with Musk, and Musk has a competing network.”
Trump helped found Trump Media in 2021 with the launch of his own social media platform, Truth Social, after being banned from then-Twitter for incitement of violence following the Jan. 6 Capitol riot. In November 2022, one month after buying the platform, Musk reinstated Trump’s account.
X, by far, remains the leading platform. In October, X had 70.4 million active monthly users on iOS and Android, according to data from Similarweb. Truth Social had 649,600.
In recent months, Musk has become a staunch Trump ally. After joining him on the campaign trail, the billionaire was tapped to co-lead a task force aimed at reducing government expenses and bureaucracy.
On the business side, Trump Media has sought to expand beyond just operating a social media platform. In August, the company began a phased rollout of its live TV streaming service, Truth+ on its platforms. It features news, commentary, weather, lifestyle, and entertainment channels that are “uncancellable by Big Tech,” Trump Media has said.
It’s also getting in on the cryptocurrency boom. The Financial Times reported earlier this month that Trump Media is in talks to acquire crypto exchange Bakkt (BKKT-0.38%), after Trump launched a new cryptocurrency venture, World Liberty Financial.
The company reported yet another quarterly loss in its third-quarter earnings, which it published on Election Day. In the three months ended Sept. 30, Trump Media lost $19.2 million, with revenue falling 5.6% to just $1.01 million from a year earlier.
Lou Basenese, chief market strategist at Public Ventures, said if he had predict Trump Media’s next move, it would be that it will use its $682 million in total assets to make an acquisition.
“I wouldn’t be surprised if they moved into a more traditional media acquisition to broaden the reach outside of Truth Social, which as an ecosystem and social media platform just hasn’t grown to their expectations,” Basenese said.
“I don’t think anyone anticipated that was gonna happen, but it’s been a disappointment largely from a social media standpoint,” he added.
Despite whispers that Trump was considering selling his more than 100 million shares in the company, the president-elect has repeatedly said that he has no plans dump his stake.
“Truth is an important part of our historic win, and I deeply believe in it,” he said in a post on Truth Social following the election, slamming the rumors as “false” and calling for an investigation into the people behind them. Trump is the primary shareholder of Trump Media with a 57.6% stake in the company.
Although he stands to gain billions of dollars from a share sale, it would be difficult to carry out without tanking the value of the stock. While Trump can legally hang onto his shares while in office, the whole situation is “messy,” according to Ewens.
As president, Trump will have direct oversight of government agencies that regulate the company and its competitors, including the Federal Communications Commission and the Securities and Exchange Commission.
“It’s messy and probably could be unethical, but it’s hard to disentangle,” Ewens said.
While the incoming administration is widely expected to take a deregulatory stance, Ewens believes that Trump’s desire to punish firms, particularly traditional media organizations, could put Trump Media in a tough spot.
“The policies he was implementing even without this company would probably have taken place — a deregulation push, changes at the FCC, the push against the media — which will benefit his firm,” Ewens said.
