Trump's media stock is halted for extremely volatile trading as America goes to the polls

Former U.S. President Donald Trump is the majority shareholder in Trump Media & Technology Group, the owner of Truth Social. (Chip Somodevilla/Getty Images via CNN Newsource)

New York — FormerU.S.President Donald Trump’s social media company was temporarily halted – twice – after a sudden and precipitous plunge on Election Day following a massive surge.

Shares of Truth Social owner Trump Media & Technology Group, which trades under the symbol “DJT,” briefly turned negative after spiking as much as 17per centearlier Tuesday morning. After the stock was halted for volatility, shares began to recover but ended the day down more than 1per cent.

However, the stock jumped more than 10per centin after-hours trading on Tuesday night as election results began to trickle in.

It wasn’t clear what caused the massive sell-off – or the earlier spike. Prediction markets have barely budged Tuesday, and other so-called Trump trades that are betting on a Trump victory remained strong.

“Markets are very thin and skittish, DJT exceptionally so,” said Steve Sosnick, chief strategist at Interactive Brokers.

The company faces a potential make-or-break moment that will be decided by voters Tuesday. The stock gained 12per cent Monday, rebounding from three days of steep losses last week.

Traders have been betting for months that a Trump victory could enhance the value of Truth Social — though justifying its current price tag would be very difficult even if Trump is back in the White House. Third-quarter results, posted by Trump Media after the closing bell on Election Day, paint the picture of a company still struggling to build a business.

Trump Media is losing money and generates very little revenue. Its main product, conservative social network Truth Social, remains tiny. Yet Trump Media has morphed into a multi-billion-dollar meme stock and a favorite way for traders to bet on how this election cliffhanger will end, inflating the net worth of its biggest shareholder along the way.

Some other elements of the so-called Trump Trade increased on Tuesday. Big bank stocks and bitcoin rallied. So did private prison companies Geo Group and CoreCivic. Prediction markets have shifted in Trump’s direction in recent days, too.

Still, the final polls and prominent election models suggest the race for the White House is a true coin flip that could go either way.

“I don’t know where the market gets its confidence from,” said Sosnick. “I think that those who have been favoring the former president all along are a confident bunch, and this is their last opportunity to express that confidence before we learn whether it is justified.”

Matthew Tuttle, CEO of Tuttle Capital Management, told CNN on Tuesday that it’s far too early to draw any conclusions from the Trump Media volatility and other market moves.

“It’s extremely early. I don’t think we’re seeing smart money here. We’re seeing people throwing darts at a board,” Tuttle said.

Trump Media announced Tuesday that its dipped 6per centyear-over-year to just US$1 million. It lost another $19.3 million, although that was an improvement from $26 million the year-ago quarter.

Even as losses pile up, Trump Media ended the third quarter with no debt and $673 million in cash and short-term investments.

Devin Nunes, the former Republican Congressman who is now Trump Media’s CEO, said the company “continues to explore additional possibilities for growth,” including potential mergers and acquisitions with fintech or other firms. Nunes highlighted recent efforts to launch a digital TV service, Truth+, and introduce live TV streaming on Truth Social.

Trump Media has plenty at stake this election.

Even though Trump Media generated just $1.6 million in revenue through the first half of this year, it’s valued at nearly $8 billion based on Tuesday’s gains. That means Trump Media’s market value is about equal to Paramount Global, a media conglomerate that owns CBS and has brought in more than $14 billion this year.

If Trump loses the election, Trump Media has little to fall back on. Venture capitalist Gene Munster recently told CNN that a Trump loss could cause Trump Media’s value to crash to just $1 billion. Others think it could be worth even less.

“I wouldn’t touch DJT because I think the downside is zero, and I’m not sure how much upside there is,” Tuttle said.

Trump owns 114.75 million shares in the company, making him the dominant shareholder. At current prices, those shares are worth about $3.9 billion. That’s up sharply from $1.4 billion on Sept. 23 when Trump Media closed at a record low.