Wall Street appears to be reacting as though Donald Trump lost the debate on Tuesday night.
Following the former president’s poorly received performance, investors quickly punished his social media company.
Other “Trump trades,” such as bitcoin and Coinbase, also took a hit on Wednesday, while bonds and Asian currencies saw gains, and funds tied to clean energy stocks surged.
Shares of Trump Media & Technology Group dropped 17% on Wednesday morning, reaching their lowest point since the Truth Social owner went public in late March.
This sharp decline reflects an immediate response to the ABC presidential debate, where Vice President Kamala Harris effectively disrupted Trump’s performance.
It’s a stark contrast to Trump Media’s stock surge on June 28 after President Joe Biden’s poor showing in the CNN debate. Although Trump’s stock initially jumped 10%, it eventually ended in the red.
Traders have often used Trump Media as a gauge of Trump’s political fortunes and his potential return to the White House.
“The market seems to believe Harris won the debate,” Matthew Tuttle, CEO of Tuttle Capital Management, told CNN on Wednesday, noting a shift in the betting markets in her favor overnight.
Trump is not only the largest shareholder of Trump Media, but he’s also the most prominent user on its main product, Truth Social. The company’s stock ticker even bears his initials, “DJT.”
“If Trump loses, I think he’ll have to sell, and DJT could drop to $1. If he wins, he likely won’t sell, and the stock might make a strong run,” Tuttle predicted.
The restrictions preventing Trump from selling his 114.75 million shares in Trump Media are due to expire later this month. While the end of the lock-up agreement will allow him to sell some shares, experts suggest it would be difficult for Trump to sell most or all of his stake without severely impacting the share price.
Michael Block, chief strategy officer and co-founder of AgentSmyth, noted that Wednesday’s selloff in Trump Media seemed to reflect investor reactions to his debate performance.
“Without solid earnings or traditional growth metrics, DJT isn’t a typical investment,” Block wrote in an email. “It’s a story stock, and it seems investors weren’t impressed with the story Trump presented during the debate.”
Heading into the debate, Trump Media’s share price saw a boost, climbing 9% in the first two days of the week.
However, over the longer term, the stock has faced significant difficulties, having lost approximately half its value since Biden exited the presidential race in July. Last week, the Truth Social owner hit its lowest level since its public debut in late March.
Trump’s investment in the company has also seen a dramatic decline, with the value of his stake dropping from $6.2 billion on May 9 to roughly $1.8 billion by Wednesday.
Twitter
Facebook