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The stock price of trump media It closed Monday’s session up more than 12%, continuing a stunning rally that began in mid-April.
The DJT ticker rose $5.15, or 12.4%, to end the day at $46.69 per share.
Trump Media owns the Truth Social app, which is frequently used by former President Donald Trump, the company’s majority shareholder and this year’s Republican presidential candidate.
“Truth Social is America’s real voice!!!” Trump wrote in a post on his site early Monday.
The company began public trading on March 26th at a price of more than $70 per share. The stock price soared over the next few weeks, closing at a low of $22.80 on April 16th.
DJT stock price
Since then, the price of Trump Media stock has more than doubled, adding billions of dollars to both the company’s market cap and the former president’s stake.
This profit occurred without any significant news that the company’s earnings have improved.
However, Jay Ritter, a business professor at the University of Florida, said the recent rise in Trump Media’s stock price could be a short-term result of the company’s recent statements and regulatory filings targeting short sellers. He said there is.
“Over the past week or so, the company has notified shareholders of ways to make it harder to lend its shares to short sellers, which may have reduced the number of shares available for short sales and increased the number of shares available for short sale.” [cost] It’s short-selling borrowing interest,” said Ritter, the initial public offering expert.
“And perhaps some of them… [short sellers] Reduced it. ”
Ritter also said there could be “some kind of short squeeze” in which short sellers who bet on the stock price falling would be forced to buy back Trump Media shares to replace the shares they borrowed to short sell. He also said that there is. Such buybacks can drive up the stock price, which increases the pressure on short sellers to buy shares to cover their positions, which also leads to higher prices.
Earlier on Monday, Trump Media announced: press release This essentially highlighted previously published information advising shareholders on how to avoid short sellers lending out their company’s stock to bet that the stock price will fall.
Last week, the company asked House Republican chairmen to investigate the possibility that short sellers were manipulating Trump Media’s stock price.
Ritter said this request, which has not yet been addressed, may also be contributing to the stock’s rise.
But Ritter said that regardless of how much the attacks on short sellers affect the price, Trump Media remains a “meme stock” whose market valuation is tied to its underlying business and future business prospects. said it had little to do with it.
Trump Media has more than $200 million in cash, but its social media business posted a $58 million loss last year on revenue of just $4.1 million.
However, the company has Donald Trump as its de facto face, and some of his political allies are among the small shareholders who are contributing to the stock’s rise.
“For these meme stocks, it’s very difficult to predict what’s going to happen on a daily or weekly basis,” Ritter said.
“Whether it was at $32 per share a week ago or $46 today, we’re debating whether the stock is 1000% overvalued or 2000% overvalued,” he said. ” he said.
Ritter noted that as a result of the stock price hovering above $17.50, Trump Media’s market capitalization would be approximately $8 billion, taking into account the 36 million additional shares recently granted to Trump.
“Companies with annual sales of less than $5 million and significant losses don’t seem to have a business plan that will generate significant growth,” Ritter said. “The company may be worth hundreds of millions of dollars, but $8 billion looks like about 2,000% of what it should be worth according to traditional metrics,” he said.
Ritter expects Trump Media’s stock price to eventually plummet to low single digits.
If meme stocks are “incredibly overvalued,” he said, “it’s easy to predict with a high degree of confidence that their long-term returns will be quite poor.”
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