By Saqib Iqbal Ahmed
NEW YORK (Reuters) – Trump Media & Technology Group’s chaotic debut captivated market participants as its shares soared wildly, with the company’s valuation rising to $9 billion before plunging.
The stock’s swings attracted traders looking to profit from the wild swings and led to sharp fluctuations in the net worth of former President Donald Trump, a majority shareholder.
Here are a few charts that show the factors behind the stock’s jumpy moves.
Trump Media shares were last at $32.41, down about 54% from where they traded on March 26. The Truth Social operator’s stock market debut followed its merger with blank-check company Digital World Acquisition announced in 2021, but suffered setbacks and delays.
Trump’s net worth fluctuated in line with the stock price. The value of the Republican presidential candidate’s controlling stake was over $6 billion when the stock hit a high of $79.38 on March 26.
That pushed his net worth to about $6.5 billion, earning Trump a spot on the Bloomberg Billionaire Index – a ranking of the world’s 500 richest people – for the first time ever. The value of his holdings is now around $2.6 billion.
Although six months of lockdown restrictions could prevent Trump from selling his shares in the media company or taking out loans, the increase in his net worth could represent a timely windfall as he appeals a $454 million civil fraud verdict against him .
The stock has drawn interest from short sellers: investors who want to sell borrowed shares in hopes of making money if the stock price falls.
Even before the company began trading under the ticker symbol “DJT,” short sellers had made bearish bets on Digital World Acquisition and shorted about 16% of its float, making the company the most shorted special purpose acquisition company (SPAC), according to data from S3 Partners on March 25, the day trading was halted.
Shorting SPACs is often more difficult than betting on common stocks because of the lack of availability of shares from equity lenders, analysts said.
According to S3 data, approximately 12% of DJT’s free float is currently sold short. The company’s data showed that DJT is the most expensive stock to borrow among stocks with a short interest rate of at least $50 million.
“That’s the main reason we don’t see significant short selling in the stock,” said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
Trump Media stock options provided bullish momentum in the first few days of their market debut. Since then, trading activity has calmed down but remains robust.
The stock’s options now feature a cluster of open contracts with strike prices at opposite ends of the spectrum, from $2.5 put options to $100 call options.
“Trading is very active and expresses different opinions about the stock. There are high concentrations of open interest in both out-of-the-money puts and calls,” said Steve Sosnick, chief strategist at Interactive Brokers.
“It’s safe to say that speculators expecting big moves in either direction are doing a lot of the trading.”
Traders don’t expect the stock to stabilize any time soon. Trump Media’s 30-day implied volatility – a measure of short-term stock fluctuations – is 160%, suggesting a daily price fluctuation of about 10%. The five most actively traded options names have an average 30-day implied volatility of about 44%, data from Trade Alert showed.
(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Jonathan Oatis)