Trump Media Stock Analysis: Why I Wouldn’t Touch DJT With a 10-Foot Pole

Stocks to sell

Trump Media & Technology Group (NASDAQ:DJT) is best-known as the parent company of Truth Social. Trump Media stock surged on initial trading, but has seen very volatile swings. In fact, since hitting a high of nearly $80 per share after its offering, this stock had given up more than half of those gains, before recently moving higher.

Investors should be cautious because of this recent upward movement. The company’s financials indicate a bleak future. This social media company will burn through cash unless there’s a user surge. I don’t see a future for this name in social media. I wouldn’t invest in this stock right now.

Trump Media Stock Surges on Alleged Manipulation

Trump Media stock surged more than 9% recently, tied to an announcement. A company urged House Republican committee leaders to investigate possible stock manipulation. This followed a deadline for Trump to become eligible for $1.3 billion shares. The reason for the sudden rise remains unclear.

Devin Nunes, the company’s CEO, urged GOP leaders to investigate alleged stock manipulation, focusing on “anomalous trading” and potential legal violations.

Nunes claimed Trump Media was a victim of “naked” short selling, a practice where shares are sold without being borrowed (or actually existing).

Nunes emphasized the probe’s importance to protect shareholders and hold perpetrators of illegal activity accountable. He addressed the letter to House committee leaders, who waited to respond. The letter comes as the Trump Media stock price fluctuates.

Nunes’s letter escalates the conflict with Citadel Securities, accusing the firm of illegal trading. Citadel has responded, criticizing Nunes, with Trump Media firing back, suggesting this ongoing battle may simply be positioning, at least for now.

The Trump Effect

Some investors have profited from betting against Truth Social’s stock despite their dislike for Trump. Driven by the company’s poor financial performance, these investors have made millions using trading tools like put options.

Despite Trump supporters’ buying, the stock continues to decline, offering lucrative opportunities.

Several top traders may look at options as a way to play the upside or downside with this stock. But with so much implied volatility already baked into most contracts, these are doomed to be suckers bets, aside from those who can time their trades perfectly.

Ultimately, Trump’s persona and his political likelihood of success is going to be a key factor to consider when it comes to this stock.

It’s for the reason mentioned before I don’t think this stock is one worth trading, even though it likely has significant downside from here based on its fundamentals. It’s just a suckers bet to go long or short, or use options, to trade this name. That’s my take right now.

The Problem with DJT Stock

DJT stock promises volatility, especially during the upcoming election period. A win for Trump might fuel further growth, but a loss could halt it (in a big way). While investors must distinguish the platform from the president, the association remains.

Like Apple’s ties to Steve Jobs, Trump Media & Technology faces risks tied to its founder. Although the platform aims to host alternative media, its momentum may remain strong with changing dynamics.

Mainstream media’s decline, driven by ideological bias, has alienated many potential viewers. Trump Media follows suit, limiting its audience despite necessity.

Because of unrelated volatility, DJT stock’s erratic investment swings must be revised. Most investors should avoid involvement – it’s just not an investment worth making on either side of the ledger right now.

On the date of publication, Chris MacDonald did not have (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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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