Things seem to be going from bad to worse for Trump Media & Technology Group (NASDAQ:DJT). As former President Donald Trump’s recent hush money trial continues to drag on, TMTG is facing an increasingly unstable future. While DJT stock is popping so far this week, sentiment from industry experts remains negative.
Notably, one financial sector veteran recently issued a stark warning on DJT stock, urging investors to offload their holdings before Trump starts to sell shares and DJT plunges to new lows. The stock’s poor performance of late only further supports his argument that DJT is destined for a race to the bottom.
What’s Happening With DJT Stock?
As noted, DJT stock is up today after gaining some momentum yesterday. However, these gains are likely to be short-lived. CNBC reports that experts believe the recent bump can be chalked up to company statements and filings aimed at short sellers. John S. Tobey, a 30-year investing professional, also laid out his take on the troubled company for Forbes. Tobey warned investors that the “floodgates are opening” on DJT stock. To him, investors should sell shares now before Trump is able to do so himself. Tobey notes:
“In the stock market, yesterday’s action is past. Certainly, do not draw a trendline based on the stock’s 8-day rise. Many shareholders acquired their shares at low prices. Having waited through the ups and downs, they might prefer to realize their profits and move on […] Then there is the classic psychological trend reversal effect. With DJT hitting $70 a month ago, and now about $40, up from the low $20s, any weakening could encourage worry-based selling. (Especially, if last week’s rise through the $35 barrier does not hold.)”
This is a valuable point, especially as weakening share prices are always a possibility with Trump. I have also argued that TMTG being so closely tied to one person — especially one with such an uncertain future — poses constant dangers to DJT stock. According to CNN, some investors who tried to bet on Trump through this stock lost half their money by early April 2024. If Trump does anything erratic to jeopardize share prices further, or if his trial takes a bad turn, those losses could also get much worse.
Why It Matters
Some investors will likely refuse to abandon DJT stock, as that would mean abandoning Trump. But as the meme stock investing crowd can attest, sticking blindly by a losing stock usually leads to catastrophic losses. As Tobey notes, “Investing successfully means running for cover when the floodgates open.”
Additionally, TMTG’s recent strategy of claiming that DJT stock is struggling because of illegal “naked short selling” isn’t working. Equally concerning, activity on Truth Social appears to be declining as well, even as Trump’s trial gets underway. If the platform can’t grow when users should presumably be turning to it for statements from Trump, what chance of success does it really have? If Truth Social isn’t succeeding, DJT stock is already on its way out.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
