What’s Behind Trump Media’s Recent Rally?

A week ago, market watchers (and political mavens) were wondering just how low shares of Trump Media (Nasdaq: DJT ) would go. But despite lingering fears of an insider sale and a 10-day steady decline in the company’s share price, Trump Media’s DJT shares have been rising recently.

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Although the stock is still well below its 52-week high of $79.38, Truth Social’s parent company’s share price has risen about 30% over the past week. The stock rebounded from a 52-week low of $11.75 on Sept. 24 to over $16 on Monday. And stocks closed up slightly again on Tuesday.

What is driving the trades and what caused the change in sentiment? Here’s what you need to know.

Why have investors become bullish on Trump Media stock?

Much of Trump Media’s stock is owned by individual investors, many of whom are fans of Trump himself. So I’m mostly bullish on the company. But the recent rally in the stock appears to be a sigh of relief for many that Trump has kept his vow not to sell his shares in the company.

Trump pledged on Sept. 13 to keep his 114.7 million DJT shares, which represent a greater than 56 percent stake in Trump Media and are worth about $1.9 billion. However, there was some trepidation among shareholders. With the lock-up period long gone (he’s been able to sell shares since September 19th), that jitters are fading and that’s encouraging people to buy more, driving the price higher.

Have any insiders sold their DJT shares?

Trump held onto his shares, but some insiders didn’t hesitate to sell when they had the chance. After the deadlock ended in September, United Atlantic Ventures, a partnership of the former Disciple contestants Andrew Litinsky and Wes Moss, downloaded 11 million shares, virtually all of his exploits. This represented 5.4% of Trump Medias total shares.

Short sellers driving up the price of Trump Media?

It’s not clear, but it’s certainly possible. Traders who bet that the company’s share price will continue to fall amid the selloff (by borrowing shares to sell and buy back at a lower price) may have hit deadlines to return them, which could have increased share price.

Short positions as of Sept. 13 (the number of shares that were shorted) were 14.5 million, more than double the number of short sellers that Trump Media saw when it began trading publicly in March.

The story continues

How Much Do Elections Influence DJT’s Share Price?

It’s hard to separate Trump Media from Trump the candidate, even for investors. The fact that the election is essentially still a wildfire in certain critical states is fueling optimism on both sides. Trump’s meeting with Ukrainian President Volodymyr Zelensky last week could have been seen as a positive sign by the Trump Media bulls.

Is inside sales at Trump Media over?

I mean, literally, the million dollar question. Despite his insistence that he has no plans to sell his shares, Trump has been known to change his mind with little warning. Selling now, however, could be a bad political move, as Trump Media supporters could feel abandoned if he increases his personal wealth (or uses the stock to pay one of the many large judgments he faces) with just a few weeks to go before the elections.

Meanwhile, there’s also the lingering question of Patrick Orlando’s intentions. ARC Global Investments of Orlando sponsored the SPAC that merged with Trump Media, and he recently won a case against Trump Media, with a judge ordering the company to deliver a larger stake in the company to Orlando, saying TMTG had breached the contract with ARC.

Orlando has not declared any intention to sell his shares, but he no longer has a role at the company, which may worry some investors.

This post originally appeared on fastcompany.com
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