The stock price of former President Donald Trump's social media company has swung up and down over the past few weeks, but it may be in for an even wilder ride. No stock is more directly linked to Tuesday's election than Trump Media & Technology Group, the parent company of Truth Social. And the outcome of the race will have big ramifications for investors and for Trump, whose 57% stake in the company is currently valued at $3.9 billion. If Trump is victorious, it could drive traffic and badly needed advertising dollars to Truth Social, which has become the former president's main online megaphone for promoting himself and attacking his political foes. A victory by Trump could also provide a big jolt to shares of Trump Media and reward the more than 600,000 individual investors who make up its most loyal shareholders. But if Vice President Kamala Harris wins, shares of the company that bear Trump's name are likely to tumble. The future of Truth Social could be in jeopardy given that it has struggled to attract new users even during a heated presidential campaign and advertising revenues are coming in lower compared with a year ago. "If you were going to get lots of subscribers it would seem this would be the time," said Mike Stegemoller, a finance professor at Baylor University. Ever since Trump Media made its Wall Street debut in March, the stock has traded as a proxy for Trump's political fortunes without regard to the company's fundamentals. Some employees recently sent a letter to Trump Media's board complaining about the leadership under its CEO, Devin Nunes, a former member of Congress for California. The company is losing millions of dollars each month, despite its merger with a cash-rich special purpose acquisition company, or SPAC. Just last week, shares of Trump Media were approaching their record high -- just above $66, set in March -- as polls appeared to show momentum in the race swinging to Trump. But when other polls showed Harris might be closing in on victory, the stock suddenly plunged. Over a one-week period, Trump Media's market value has fluctuated anywhere from $6 billion to $9 billion. On Monday, the stock closed at $34.34, up about 180% from its low in late September. On Tuesday, the shares had some big swings, surging nearly 15% before suddenly falling and giving up that gain about an hour before the end of the trading day. The volatile activity led to several brief trading halts in the shares to allow the market to calm down. Trump Media did not respond to a request for comment. This past weekend, some investors in Trump Media continued to sound an optimistic note about the company's long-term prospects. On one Truth Social message board, several posters said the nearly $350 million in cash that the company had after its merger would enable it to build out its social media product offerings. Chad Nedohin, a part-time pastor and engineer, and one of Trump Media's most outspoken cheerleaders on Truth Social, said he was confident that Trump would win and that the stock would go much higher. "We are not in a bubble at all," Nedohin said. "It is very obvious they have big plans." But Wall Street has not been kind to the stock prices of companies that have merged with SPACs. Many private companies that went public via that route currently have stocks that trade well below $10. The average share price for all technology and media companies that completed a merger with a SPAC is about $5.33, according to SPACInsider, which collects data on the SPAC market. Consider the case of Rumble, a conservative-leaning streaming-video company that is focused on the same audience as Trump Media. Rumble completed its merger with a SPAC nearly 18 months before Trump Media, and its share price, now around $5.70, has not topped $10 since summer 2023. Yet in the second quarter this year, Rumble generated $22.5 million in revenue -- more than 25 times the revenue taken in by Trump Media during that period. "There is still nothing I have seen, from an ongoing business perspective, that would justify the current value" of Trump Media, said Alan Jagolinzer, an accounting professor at the University of Cambridge. Another thing Trump Media investors have to worry about: what Trump will eventually do with his nearly 115 million shares. This summer, the former president said he had no intention of selling his shares. But that could change after the election. If Trump loses, he might look to monetize some of his vast holdings, resulting in a flood of shares into the market that could drive down the stock price. If he wins, federal ethics rules might require him to sell stock to avoid a potential conflict of interest with his job as president. Either outcome would bring uncertainty for Trump Media shareholders that could affect the share price for months to come. This article originally appeared in The New York Times.
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