Trump Media Stock: Only Ride the DJT Rollercoaster if You Dare

Stock Market

Could meme-stocks revival be underway? Trump Media & Technology Group (NASDAQ:DJT), typically shortened to Trump Media, recently started trading publicly.

This long-awaited event occurred in the wake of a special purpose acquisition company merger with Digital World Acquisition. Whether Trump Media stock is a meme stock or a sustainable wealth builder, it’s definitely worth checking out if you can handle the volatility.

Avoid investing in Trump Media solely based on hype and media attention. Stay informed as a trader and discover the latest on Trump Media and the attention-grabbing new stock. So, without any more waiting, let’s delve into what could be coming for DJT stock traders.

Trump Media Stock Jumps Right out of the Gate

First of all, in case you didn’t notice, the ticker DJT represents the initials of the former President and current presidential candidate, Donald J. Trump. Yet, trading Trump Media shares doesn’t necessarily have to be an expression of a political viewpoint.

Most likely, both the buyers and the short sellers are probably just trying to make money. And speaking of short sellers, S3 Partners recently estimated that the short interest for Trump Media stock was approximately 11% of the outstanding shares.

The short sellers may have gotten squeezed, though, soon after Trump Media shares started trading. Believe it or not, DJT stock soared 40% on the first day, followed by another 18% on the second day.

DJT Stock: Fundamentals Might Not Matter for a While

Another explanation, besides the meme-stock short squeeze hypothesis, involves a potential gamma squeeze. As InvestorPlace contributor Thomas Yeung explained, “Gamma squeezes happen when stock prices suddenly rise quickly, forcing options market makers to buy shares to hedge their positions.”

In other words, behind-the-scenes options trading may have contributed to the huge early rally in Trump Media stock. One thing’s for sure though: short-selling this stock is a dangerous proposition.

Don’t be surprised if, during this election year, short-term traders (both long and short) control the price action of DJT stock. To be honest, Trump Media’s fundamentals might not matter for a long time.

For what it’s worth, Trump Media reportedly generated $3.4 million in revenue in the first nine months of 2023 but incurred an earnings loss of $49 million. That’s important to know if you plan to invest long-term in Trump Media.

Don’t expect fundamentals-based facts to be extremely relevant for the remainder of 2024, though. As the old saying goes, in the short term, the stock market is a voting machine (pardon the pun).

Trump Media Stock: Ride the Roller Coaster, if You Dare

Trump Media could become an income-positive media empire someday. It’s hard to tell at this point, though. For the time being, it’s risky to invest heavily in Trump Media.

Volatility-tolerant traders might choose to take a chance and pick up a few Trump Media shares. Just make sure that your position size is small and you have an exit strategy in place. If you’re truly prepared to ride the roller coaster, you might do well with Trump Media stock.

On the date of publication, David Moadel 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.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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