Shares of Trump Media & Technology (NASDAQ: DJT) were soaring last month in seeming anticipation of a Trump victory in Tuesday's election as the former president's poll numbers generally improved over the course of the month, as did his chances of victory, according to betting markets.
The parent of the Truth Social social media app also released its Truth+ streaming app across multiple platforms, including iOS, Android, and the web, showing the company branching out from Truth Social.
However, the primary reason for the gains seemed to be bets on a Trump victory. The social media stock finished the month up 120%, according to data from S&P Global Market Intelligence.
As you can see from the chart below, the stock soared through most of the month before giving up gains at the end of October.
Is the Trump trade back?
The performance of Trump Media & Technology stock has become highly correlated with Trump's own prospects in the presidential race as the business itself has little to offer investors at this point as its quarterly revenue is less than $1 million.
In the presidential race, the month was marked by a solid showing by Trump's running mate, JD Vance, in the vice presidential debate and generally positive poll numbers for Trump, leading to increased predictions that he would win the election. On the betting site Polymarket, a French trader bet more than $30 million on Trump's victory based on his analysis of polls.
Last Friday, a New York Post article said that Trump Media's surge was driven in part by a belief that Elon Musk could buy Trump's struggling media company.
Spending several billion dollars on a profitless social media company would be odd for Musk when he owns X, formerly Twitter, but it's certainly possible that buyers of Trump Media stock believe that's a possibility given Musk's strong support of the Trump campaign.
Image source: Getty Images.
Can Trump Media stock hold its gains?
The stock has pulled back since peaking last Wednesday based on some evidence of Harris clawing back some of Trump's gains. The well-respected Selzer poll also showed that Harris was ahead in Iowa, a state that was assumed to be safe for Trump.
Expect the stock to move wildly on Wednesday in response to the election results, even if the winner isn't clear. The stock's movements on Tuesday could also indicate who investors expect to win based on exit polls.
If Trump loses the election, the stock could head a lot lower. Even if he wins, it's not yet clear how Trump Media will become a profitable company in a challenging media environment.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
