Big sell-offs for Trump Media stock could show how investors felt about last night’s presidential debate, but there are other big factors at play.
Shares of Trump Media & Technology Group (DJT -10.47%) are sinking in Wednesday’s trading. The stock was down 13.2% as of 11:30 a.m. ET today, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500 index was down 1.2% and the Nasdaq Composite index was down 0.7%.
Trump Media stock is heading lower following last night’s presidential debate between Donald Trump and Kamala Harris. New inflation data and concerns that company insiders will soon be able to sell their shares after a lockup expires are also pressuring the company’s valuation. Today’s sell-offs have pushed Trump Media stock to a new lifetime low.
The debate and inflation data
Donald Trump is the company’s majority shareholder, and the stock has often made moves in conjunction with perceptions surrounding the outlook for the current presidential race. Some investors were likely looking for last night’s debate to provide a bullish catalyst for the stock that could reverse selling pressures ahead of the looming lockup expiration.
With bullish momentum failing to materialize after the debate and a large number of shares set to become eligible for sale on the open market in the near future, investors are feeling bearish today. And new economic data isn’t helping.
The latest core Consumer Price Index (CPI) data from the U.S. Labor Department showed a 0.3% monthly increase in August, which came in ahead of expectations for a 0.2% increase. While other inflation data looked more promising, the core CPI data is raising concerns.
With the new data, it’s looking more likely that the Federal Reserve will deliver a 25-basis-point cut for interest rates rather than the 50-point cut that some investors have been hoping for. As a result, the broader market is facing bearish pressures today, and some growth stocks and speculative plays are seeing outsize sell-offs.
What comes next for Trump Media stock?
In the near term, the next big test for the stock will likely be the expiration of its lockup period. Trump Media went public through a merger with a special purpose acquisition company (SPAC) in March, and insiders have been prevented from selling shares because they have been on the market for a relatively short time.
The lockup preventing insider selling is set to expire on Sept. 25, although it could wind up taking place as early as Sept. 20. If Trump and other company insiders wind up selling a large number of shares, the stock could plummet. On the other hand, it could get a big boost if the lockup expiration is followed by a relatively small amount of insider selling.
Over the long term, there’s still a lot of uncertainty surrounding Trump Media. The company has launched new services in video streaming and a content delivery network, but the Truth Social media platform remains the core of the business and has been monetizing at low levels.
With limited visibility into how the company plans to ramp up its operations and uncertain political catalysts on the horizon, the stock will likely continue to be highly volatile in the coming months.
Keith Noonan 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.
