Individual investors poured money into Trump Media & Technology Group on the first day of trading for DJT shares following the completion of its merger with blank-check company Digital World Acquisition Corp.
Shares of DJT rose 16% on Tuesday and another 14% on Wednesday.
Shares of DJT rose 16% on Tuesday and gained another 14% on Wednesday. And the shares rose another 2% in morning trading Thursday.
“We’re definitely seeing interest among retail investors,” said Bret Kenwell, U.S. investment and options analyst at brokerage firm eToro, in an email to Barron’s. “DJT was the top-traded name on the eToro U.S. platform on Tuesday, accounting for 8% of equity transactions.”
It appears that the meme-stock craze is back. Reddit, the social-media company that was big part of the first round of meme mania in 2021, just debuted on Wall Street last week, and its initial public offering price has nearly doubled as well.
Investors need to be cautious, though.
“It’s impossible to say how much some of these stocks can rally in the short term,” Kenwell said, adding that the current meme rally “doesn’t seem to have the same fervor as it did a few years ago.” Kenwell noted that many eToro customers are more interested in trading Bitcoin and artificial-intelligence-related stocks like Nvidia.
But others point out that the rally in DJT could be fueled by other factors. The stock is somewhat heavily shorted, so a squeeze could push the price higher, as bearish investors may be forced to buy DJT to cover their positions and cut their losses.
There’s also the fact that DJT is a somewhat unusual meme stock. Revenue is scant and the company isn’t profitable. Investors seem to be more inclined to buy the shares as a show of support for Trump as he seeks a second term as president this fall.
Trump Media & Technology Group CEO Devin Nunes, a former Republican congressman,told conservative cable network NewsmaxTuesday that “there’s over 400,000 people who have invested in our company so far, and we hope more and more people will invest.”
Trump’s net worth has leapt in the past few days as a result of the stock’s gains. His nearly 60% stake in DJT is currently valued at around $5.2 billion.
“Traders are jumping into Trump Media,” said David Russell, global head of market strategy at TradeStation, in an email to Barron’s. “DJT is suddenly a big name people have to pay attention to—especially in an election year.” Russell said that DJT was the seventh-most actively traded security on the TradeStation platform Tuesday, ahead of Apple and many of the larger index-based exchange-traded funds.
That’s why some think the political angle could add more fuel to the rally. While the original meme investors in stocks like GameStop and AMC Entertainment Holdings were driven almost solely for financial gains, DJT investors have more than just monetary reasons for buying the stock.
“You can’t question the fervor of the former president’s political supporters, many of whom have viewed DJT as a call option on the MAGA movement,” said Steve Sosnick, chief strategist at Interactive Brokers. “This is a way to put their money where their mouth is and have an opportunity to profit.”
Sosnick said that the firm’s IBKR brokerage site has seen significant interest in DJT and Reddit. And in the case of DJT, he thinks investors won’t be deterred by the company’s weak fundamentals.
“DJT stock is divorced from valuation metrics,” he said. “But you can’t divorce the politics from the stock.”