Why Trump Media’s Stock Is Falling Today

Actions of Trump Media & Technology Group (NASDAQ: DJT) dive into Wednesday’s trades. Shares were down 13.2% at 11:30 a.m. ET today, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500 the index fell by 1.2% and the index Nasdaq Composite the index fell by 0.7%.

Shares of Trump Media are down 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 lock-up expires are also putting pressure on the company’s valuation. Today’s selloff pushed shares of Trump Media to a new lifetime low.

The inflation debate and data

Donald Trump is the company’s majority shareholder, and the stock has made frequent moves on perceptions of the outlook for the current presidential race. Some investors were likely looking for last night’s debate to provide an optimistic catalyst for stocks that could reverse selling pressure before the lockout expires.

With bullish momentum not materializing after the debate and a large number of stocks set to become eligible for open market sale in the near future, investors are feeling bearish today. And the new economic data isn’t helping.

The latest core consumer price index (CPI) data from the US Labor Department showed a monthly increase of 0.3% in August, which came in ahead of expectations for a 0.2% rise. While other inflation data looked more promising, core CPI data raised concerns.

With the new data, the Federal Reserve is more likely to deliver a 25 basis point cut in interest rates, rather than the 50 basis point cut that some investors had hoped for. As a result, the broader market is facing bearish pressure today, with some growth stocks and speculative plays seeing huge selloffs.

What’s Next for Trump Media Stock?

In the near term, the next big test for the stock will likely be the expiration of the lock-in period. Trump Media went public through a merger with a special purpose acquisition company (SPAC) in March, and insiders have been prevented from selling stock because it has been on the market for a relatively short time.

The lockout preventing insider selling is scheduled to expire on September 25, although it could end up happening as early as September 20. If Trump and others in the company end up selling a large number of shares, the stock could fall. On the other hand, it could get a big boost if the lockout expiration is followed by a relatively small amount of domestic selling.

The story continues

Longer term, there is 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 monetized 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 is likely to continue to be highly volatile in the coming months.

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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.

Why Trump Media Stock Is Falling Today was originally published by The Motley Fool