Former President Donald Trump’s social media company, Truth Social, experienced a significant and sudden drop in the stock market on Tuesday, causing trading to be temporarily halted. The company, Trump Media & Technology Group, had initially been trading at around $31 per share before quickly dropping below $29 on heavy trading volume. Nasdaq paused trading for Trump Media for five minutes due to the high volatility, and when it resumed, the stock briefly bounced back before plunging below $27. By the end of the day, the stock was down 10% and 20% below its daily high.
Despite the unexpected drop, there were no apparent new developments or announcements that could explain the sudden decline in Trump Media’s stock price. CEO of Tuttle Capital Management, Matthew Tuttle, speculated that technical factors may have played a role in the selloff. He suggested that when the share price failed to break through its 200-day moving average, traders began betting against the stock. Trump Media has been known for its volatility, with significant fluctuations in its stock price.
Prior to this sudden drop, Trump Media had experienced significant growth, doubling its value in just three weeks. This surge was driven by factors such as polling and betting odds indicating a tight race for the White House. However, as Tuttle noted, such rapid movements can sometimes lead to a rapid decline. The trading volume for Trump Media on Tuesday was described as “enormous,” with the stock being compared to meme stocks like GameStop and AMC, which are known for their volatile nature based on momentum rather than fundamentals.
University of Florida professor Jay Ritter highlighted the rarity of such a significant stock plunge without any news, attributing it to the nature of meme stocks and their susceptibility to sudden shifts in momentum. At its peak on Tuesday, Trump’s stake in the company was valued at $3.88 billion, but by the end of the day, it had decreased to $3.1 billion. This marked the second recent trading halt for Trump Media, following a similar incident last month where Trump criticized Nasdaq for the routine action and threatened to move the listing to the New York Stock Exchange. Despite the drop, Trump Media shares rose 2% in after-hours trading.
The intense volatility and sudden drop in Trump Media’s stock price on Tuesday left traders puzzled about the cause of the decline. With no apparent new developments affecting the company, experts pointed to technical factors and the nature of meme stocks as potential explanations for the sharp drop. Trump’s stake in the company experienced a significant decrease in value from its peak during the volatile trading day. The incident marked the second trading halt for Trump Media in recent times, adding to the uncertainty surrounding the company’s future performance. Despite the challenges faced, Trump Media shares showed a slight rebound in after-hours trading, suggesting ongoing investor interest and potential for recovery.
