Trump's social media stocks are making an epic comeback as the election approaches

new York
CNN
—

Former President Donald Trump's social media company is on fire on Wall Street. It's all about Trump's perceived chances of retaking the White House.

Until recently, Trump Media & Technology Group was in meltdown mode. The stock price fell to a record low of $12.15 on September 23, a stunning 82% drop from the peak.

But Truth Social's owner has seen a massive rebound of nearly 150% in the three weeks since, seeing its share price more than double. Last week alone, the price rose almost 50% and rose another 18% on Monday.

It's a remarkable turnaround, even for a notoriously volatile stock that has been described as a meme stock on steroids.

Trump Media did not announce any sudden revenue stream or flashy new product that might explain the move. It received no support from Wall Street analysts or a major shareholder.

Instead, the turnaround was driven by the perceived chances of a Trump victory in November. Trump Media has long served as a way for traders to bet on the election.

The race for the White House remains incredibly close and could still go either way. But the betting markets and some recent polls have shifted somewhat in Trump's favor.

“It's really simple. People realize that this stock has the potential to make a difference if Trump is elected. And if he doesn’t get elected, it probably goes to zero,” said Matthew Tuttle, CEO of Tuttle Capital Management.

Trump is the face of the company. He is the most popular user on Truth Social and the dominant shareholder with 114.75 million shares.

The value of Trump's stake in the company has increased by about $1.7 billion to $3.4 billion since Sept. 23.

Jay Ritter, a finance professor at the University of Florida who has studied capital markets for four decades, described the 100 percent increase for Trump Media since Sept. 23 as “stunning.”

“Meme stocks thrive on attention, and in the case of Trump Media, the price also reflects expectations about who will win the November election,” Ritter said, pointing to betting markets like PredictIt that show Harris' lead over Trump has disappeared.

Michael Block, chief operating officer and co-founder of AgentSmyth, noted that there is a lot of bullish options activity expiring on November 15, just days after the election.

“This looks like a selective bet on a Trump victory on Election Day,” Block said. “Trump’s poll numbers are improving and his alliance with Elon Musk is changing the narrative.”

Despite the recent rise, Trump Media's share price is still far from its March high of $66. And the value of Trump's stake is still about $2 billion less than it was briefly worth in late March.

Beyond the election, Trump Media's stock price has benefited from the former president holding on to his shares. Many investors speculated that Trump might sell his shares if lockdown restrictions preventing insiders from selling were lifted. However, so far Trump has not announced any stock sales and has publicly stated that he is not selling stocks.

“If Trump were winning in the polls but you were convinced he was selling out, you certainly wouldn't see the trend we've seen,” Tuttle said. “The fact that he says he won’t sell – and that he actually hasn’t sold – is the backdrop to the rally.”

Ritter has long warned that the market is dramatically overvaluing Trump Media. He remains deeply skeptical of Trump Media, arguing that the company is worth little more than the cash on its balance sheet because it has not demonstrated that it has a business plan to generate profits.

“At today’s share price of about $25, the stock is about 1,000% overvalued,” Ritter said, “which suggests there will be a 90% decline at some point.”