Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Donald Trump’s Truth Social platform is riding a wave of enthusiasm from small investors as a second day of gains took the lossmaking social media group’s valuation above $13bn.
Trump Media & Technology Group topped the leaderboard of most-discussed stocks in WallStreetBets, Reddit’s popular stock trading forum, for several hours on Wednesday. On Tuesday, its first day of trading after a merger with a shell company, it surpassed far larger groups to rank among the top 15 most-traded stocks by volume on Interactive Brokers, a platform popular with active traders.
“We’re seeing a lot of flow,” said Steve Sosnick, chief strategist at Interactive Brokers. “Our customers are typically drawn to high volume, high volatility, high profile situations, so it’s not a surprise.”
The stock closed up 14 per cent at $66.22 on Wednesday for a market capitalisation of $13.5bn on a fully diluted basis.
TMTG has gained one-third in value since it began trading on Tuesday after its merger with Digital World Acquisition Corp. The gains give the former president a windfall, on paper, of about $5.3bn for his stake in a group that reported just $3.4mn in revenues for the first nine months of 2023 and $49mn in losses.
The sharp rally in TMTG as well as in Reddit, the social media site that went public last week, has prompted speculation that investors could be poised for a revival of “meme stock mania”. A craze among small investors in 2021 sent shares in household names, including retailer GameStop and cinema chain AMC, soaring.
“The one thing to me that separates a ‘meme stock’ from just any hot stock is a passion or fervour. I think it certainly applies in the case of DJT,” said Sosnick, citing the ticker symbol for TMTG, which is derived from Trump’s initials.
Reddit was the fourth-most traded company on Tuesday on Interactive Brokers, days after a blowout public offering that saw its shares leap 48 per cent on their debut. On Wednesday they fell 11 per cent, but still stood 70 per cent greater than their IPO price.
“There’s definitely potential for [TMTG and Reddit] to become meme stocks. I just would like a bit more data on the magnitude of flows just to make that call” said Lucas Mantle, head of data science at VandaTrack, a data specialist in retail trading.
VandaTrack reported a $6.5mn net inflow from retail investors into TMTG on Tuesday, more than three times the inflows the previous day, which themselves were up sharply from the average seen in the weeks leading up to its name change.
The discussion on traders’ online forums reflected the level of retail investor interest, with one user of StockTwits saying market bears were “terrified this is becoming the next Nvidia”.
“Hate Trump but I knew his minions wouldn’t be able to help themselves the moment the ticker changed. Would’ve doubled down if I had any additional funds,” said WallStreetBets user FlapjackInProtest, who claimed he had turned $500 into $6,000 by trading TMTG options.
Others reporting winning bets drew praise. WallStreetBets user optimal_burrito replied to someone who posted that buying Trump Media was their first winning trade with the message: “You’re gonna start winning so much you’ll get sick of it #DJT.”
