The shares of Trump Media, the parent company for Truth Social (NASDAQ: DJT), surged 19% Tuesday. This is the fourth consecutive day that the stock has risen.
Investors appear to be rallying behind the company in spite of recent management changes, and despite ongoing financial difficulties.
The intraday trading volume was nearly three times the average 30-day volume. By midday, over 34,000,000 shares had been traded, a high that exceeded $22.
Trump Media, owned by the former president Donald Trump in majority, is now up 80% since its low point of $11.75 on September 24, 2017. The stock is still well below the $79.38 peak reached in March.
What is driving the DJT rally?
Trump Media stock’s recent rise coincided with Donald Trump’s high-profile weekend rally in Butler, Pennsylvania.
Elon Musk of Tesla, the CEO who publicly supported Trump in 2024’s presidential elections, was a prominent supporter at this event.
Musk told the crowd that Trump must win in order to “preserve democracy” in America, giving the campaign of the former President and his company a big boost.
Musk’s endorsement, as a prominent figure in the tech and business world, has probably helped to fuel retail investors’ optimism. They see Trump Media not only as an investment, but as a statement of support for Trump.
DJT challenges
Trump Media, despite the recent stock surge, has been facing several challenges internally.
The company announced last week that Andrew Northwall had resigned as its chief operating office in September. No explanation was given and there wasn’t a successor named.
Sandro de Morais, the chief product officer of the company, as well as several other lower-level staff, have all left, raising questions about its leadership stability.
Trump Media will also hand over almost 800,000 common shares to ARC Global Investments II after a court ruled that it had breached a contract with an early investor.
The sale follows a large share sale made by the company owned by two co-founders of Trump Media, who sold nearly their entire 11 million shares shortly after early shareholders were allowed to liquidate.
Trump Media is still struggling financially
Trump Media is still in financial trouble despite the rally.
In its latest quarterly reports, the company reported a net loss of more than $340 millions on revenues of less that $2 million.
Truth Social is the flagship platform of the company, but it continues to draw only a small fraction of social media users as compared with major competitors such as X (formerly Twitter), and Facebook.
Trump Media’s market cap is still over $4 billion. This shows the investor interest in the stock, which could be linked to Trump’s political future.
Trump has pledged not to sell any of his company shares, which equates to a 57% stake, worth $2.55 billion on Tuesday.
Analysts warn that while Trump Media stock is up, the long-term viability of the company remains in doubt.
The company faces many challenges to overcome, including ongoing changes in management, slow growth of revenue, and legal issues.
The recent stock surge could be an opportunity for those investors who are banking on Trump’s success in politics and the potential of his media platform.
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