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Donald Trump's Truth Social platform is riding a wave of enthusiasm from small investors, as a second day of gains pushed the loss-making social media group's valuation to more than $13 billion.
Trump Media & Technology Group topped the leaderboard of the most discussed stocks on WallStreetBets, Reddit's popular stock trading forum, for several hours on Wednesday. On Tuesday, its first trading day after merging with a shell company, it outpaced much larger groups to rank among the top 15 most actively traded stocks by volume on Interactive Brokers, a platform popular with active traders.
“We're seeing a lot of flow,” said Steve Sosnick, chief strategist at Interactive Brokers. “Our clients are typically attracted to high volume, high volatility and prominent positions, so it's not a surprise.”
The stock closed up 14 percent at $66.22 on Wednesday, bringing its market value to $13.5 billion on a fully diluted basis.
TMTG has gained a third of its value since it began trading Tuesday following its merger with Digital World Acquisition Corp. These gains give the former president a windfall, on paper, of about $5.3 billion against his stake in a group reported at just $3.4 million. in revenue for the first nine months of 2023 and losses of $49 million.
The sharp rise in TMTG as well as in Reddit, the social media site that went public last week, has fueled speculation that investors could be bracing for a revival of “meme stock mania.” The frenzy among small investors in 2021 sent stocks of household names, including retailer GameStop and movie theater chain AMC, soaring.
“The one thing to me that separates a 'meme stock' from any hot stock is emotion or enthusiasm. I think that definitely applies to the case of DJT,” Sosnick said, citing the ticker symbol TMTG, which is derived from Trump's initials.
Reddit was the fourth most traded company Tuesday on Interactive Brokers, days after a massive public offering that saw its shares soar 48 percent in its debut. On Wednesday, shares fell 11 percent, but were still 70 percent above their IPO price.
“There is definitely potential for [TMTG and Reddit] To become meme stocks. “I would just like to have more data on the volume of flows just to make that decision,” said Lucas Mantel, head of data science at VandaTrack, who specializes in data in retail.
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VandaTrack reported a net inflow of $6.5 million from retail investors into TMTG on Tuesday, more than three times the previous day's inflows, which were up sharply from the average seen in the weeks leading up to its name change.
Discussion on online trader forums reflected the level of retail investor interest, with one StockTwits user saying that market bears were “terrified of becoming the next Nvidia.”
“I hate Trump but I knew his followers wouldn't be able to help themselves the moment the index changed. I would have doubled if I had any extra money,” said WallStreetBets user FlapjackInProtest, who claimed to have turned $500 into $6,000 by trading TMTG options. “.
Others have reported winning bets and received praise. WallStreetBets user @Optim_burrito responded to someone who posted that buying Trump Media was his first winning trade with the message: “You'll start winning so much that you'll get tired of it #DJT.”
