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DJT Soars as Trump Leads the Presidential Election, Beats Q3 Loss Estimates

Updated: Nov 7, 2024

Shares of Trump Media & Technology Group jumped in extended trading, as the former president was projected to win the popular vote in the 2024 presidential election. That's despite the fact that DJT reported a net loss of $19 million for the third quarter, with significant streaming and legal expenses. The market reaction reflects investor expectations of DJT's future in case of a Trump presidency-the stock is now traded as a speculative proxy related to his political fortunes.



Key Takeaways:

  • Trump win forecasts drove the DJT stock up more than after the market despite reporting a Q3 loss of $19 million. 

  • Legal fees and streaming-related expenses were among the top contributors to the quarterly loss.

  • The DJT stock has turned fairly volatile of late, frequently based on news regarding Trump's chances of election and general political sentiment.

  • Continued volatility is expected by analysts as DJT works its way through regulatory hurdles along with the changing social media landscape.



Trump Victory Projection Propels DJT Stock Surge Despite Q3 Losses


Stock Reaction Responds to Election Sentiment

After projections of Trump's victory were announced, DJT stock surged upwards as high as 25% in after-hours trading. The stock jumped despite the company reporting a net loss of $19.2 million in Q3, showing in some respects how DJT is one peculiar stock directly connected with the political momentum for Trump. During the election period, DJT shares have seesawed violently; investors have been betting on the stock as if it were a pure play on Trump's political destiny.


According to projections, Trump carried key battleground states to bring his electoral count to 248, with Kamala Harris receiving 214 votes. The rise in electoral votes has shifted market sentiment to favor DJT as it creates expectations of a Trump presidency that favors the company's regulatory environment, business, and reach.



Q3 Financial Losses: Legal Fees and Streaming Costs

The company recorded a net loss of $19.2 million in the third quarter, with $12.1 million of the total coming due to legal fees. Those came from its recent purchase of TV streaming technology and lingering expenses related to a SPAC merger earlier in the year. Research and development spending totaled $3.9 million for the quarter, related to its streaming and media services.


Despite these financial challenges, Trump Media recorded revenue of $1 million for the quarter and retained cash and cash equivalents of $672.9 million. The company's stock reversed earlier losses and managed a slight uptick in extended trading. Analysts note that while those figures represent significant expenses, the finances of DJT could improve under favorable market conditions tied to Trump's political success.



Volatility Expected to Continue Amid Trump Victory Sentiment


Election-Driven Volatility and Investor Speculation

High volatility was also predicted by analysts, who explained that DJT stock acts like a binary bet on Trump's influence and policy potential. On the "Catalysts" show on Yahoo Finance, Matthew Tuttle, chief executive at Tuttle Capital Management, said, "the trajectory of shares hinges on a 'buy the rumor, sell the fact' trading strategy," meaning DJT could see sudden surges and steep drops with the turns of political events.


Steve Sosnick, chief strategist at Interactive Brokers, put DJT's action squarely in a class of behavior occupied by meme stocks. "When a stock is this volatile, it tends to swing in both directions," he said. This dynamic has attracted attention from both retail and institutional investors who view DJT as a unique opportunity for gains related to the election.


DJT Fundamentals and Challenges Ahead

While investor optimism has driven near-term gains, DJT continues to struggle financially and operationally. The $1 million of revenue in Q3 was down slightly from the $1.07 million reported in the same period last year, while DJT's year-to-date revenue is down 23 percent versus last year. That said, Trump Media has been able to secure healthy levels of cash, which could underpin future expansion efforts in the streaming and social media markets.


DJT operates Truth Social, which is a social media platform Trump founded after major platforms like Facebook and Twitter banned him following riots at the Capitol on January 6. The uphill battle against established players has been the reality for Truth Social, but with Trump having recently returned to traditional social media, the company has continued developing an ecosystem for his followers.



Market Outlook: Trump's Influence on DJT's Future


Regulator and Market Expectations in the Trump Presidency

Victory projections for Trump sent the DJT stock surging, as investors closely look to see how his presidency will shape the regulatory landscape for both media and technology. A presidency by Trump might actually create more friendly regulatory conditions that could benefit companies working within emerging technology spaces, such as social media and streaming.


However, the profitability of the company remains speculative, with its high operational costs and continued R&D expenses. As analysts mentioned, success would depend upon DJT's aptitude regarding financial challenge management, even with the renewed political clout of the founder.


Long-Term Viability and Potential Market Position

Long term, DJT's fate may come down to how solidly it sets its base of users and grows beyond Trump's political base. The social network Truth Social has been fighting for market share against competitors such as X, formerly Twitter, and Facebook, with mixed results, and though the platform has picked up steam, it remains to be seen if it reaches profitability.



Investors also consider DJT's position in the greater scheme of things in media and technology, especially since the company is working on a new streaming service. In light of the political power play stirred up by Trump, any short-term gains for the company depend on how well it could manage its costs to evolve in a competitive media environment.


Conclusion

The Trump Media & Technology Group sees the renewal of investor interest, judging by the reported Q3 loss, with a projection for Trump's victory that drives DJT stock higher. Though the volatility in DJT stock may not be going away just yet, the current market reaction certainly does indicate high confidence in Trump's influence and likely policy perks to his media ventures. With DJT facing headwinds, both financial and operational, any new development that would change its path in the tech and media industries is anxiously awaited by investors.

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