Trump Media Stock Falls 17% After Trump-Harris Debate

(MENAFN- ValueWalk) Trump media stock sank to its lowest point since going public.

Shares of Trump Media and technology Group (NASDAQ:DJT) were down as much as 17% Wednesday, one day after the presidential debate between former President Donald Trump and Vice President Kamala Harris.

The company, owned by Trump, runs the Truth Social social media platform. However, the movements of the stock price have largely been tied to the varying prospects of Trump winning the presidency , as the company has not generated much in the way of earnings.

While individuals may have different views on which candidate won the debate Tuesday night, the markets viewed Harris as the winner, based on the Trump Media stock selloff.

As of 2:00 p.m. ET on Wednesday, Trump Media stock had clawed back some of its losses, but it was still down about 13% on the day, trading at around $16.20.

It is the lowest price for the stock since it went public on March 26 after merging with Digital World Acquisition Corp., a special purpose acquisition company, or SPAC. Trump Media stock is down about 78% since it reached a high of over $71 per share on March 27.

Trump Media and Technology Group stock has fluctuated these last few months more on the prospects of Trump's presidential bid than the company's performance.

In the second quarter ended June 30, the company generated just $837,000 in revenue, down from $1.2 million the same quarter a year ago. It had a $16.4 million net loss, or 10 cents per share, in the quarter. About half of the net loss, roughly $8.3 million, stemmed from legal expenses related to the merger with Digital World.

The company did announce the launch of a TV streaming platform, and has $334 million in cash for future investments, but to date, it has struggled to generate earnings. With an astronomical price-to-sales ratio of 616 , Trump Media stock is overvalued in relation to its sales.

After the initial spike during the IPO, the stock has been quite volatile. The two most recent spikes have been related to Trump's race for the presidency.

In the days leading up to the June 27 debate between Trump and President Joe Biden, Trump Media stock climbed some 46% to over $39 per share. The debate was considered a win for Trump, nearly across the board.

Then, the stock price spiked again during the Republican National Convention on July 15-18. Trump Media stock shot up to over $46 per share, buoyed by the convention, as well as Biden's bad debate performance and Democratic Party infighting that led many investors to project a Trump win in November.

Since then, however, Trump Media stock has tumbled, dropping after Biden exited the race on July 21 and Harris replaced him. The stock also sank after Q2 earnings and then fell sharply after the September 10 debate with Harris.

Trump can cash out his shares starting September 19, the date when a lock up provision expires. He owns about 115 million shares, according to the New York Times .

At the current share price, he could cash out for up to about $2 billion. Whether or not he does remains to be seen, as he could wait for the stock price to rise or just continue to hold them.

Should he win the election in November, the stock price would almost certainly rise. According to the website Polymarket , a source for betting predictions, Trump is still a slight favorite to win in November with odds at 50% compared to Harris at 49%.

But if Trump did decide to sell his shares on September 19 or shortly thereafter, it would likely have a negative impact on the stock price.

Investors should treat Trump Media stock like a meme stock at this point. There is just way too much uncertainty and way too little earnings to have confidence in its growth right now.

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