Few events have had as pronounced an effect on the financial markets in 2024 as the re-election of Donald Trump as President of the United States. The result of the 2024 election sent shockwaves the world over — perhaps most notably, it served as the final spark needed to ignite a wider cryptocurrency market bull run.
However, there’s a less-publicized yet equally interesting (and at times, profitable) intersection between the billionaire real estate mogul and the stock market — and that’s Trump Media & Technology Group (NASDAQ: DJT).
As the owner of the budding social media platform Truth Social, Trump Media has the potential to become the cornerstone of a new wave of conservative media in the United States. Over the course of 2024, however, DJT stock didn’t trade in accordance with its fundamentals. It didn’t even trade based on future projections or growth potential — instead, it acted as a barometer for the popularity of Trump’s campaign — and his odds of securing the White House.
Picks for you
Although it was often derided as a meme stock based on its significant volatility, Trump Media stock managed to net sizable returns for traders with a hefty risk tolerance and a good sense of timing. So, how would it have performed in the hands of a long-term, buy-and-hold investor?
Buying Trump Media stock after its IPO would have netted negative returns – but there’s a catch
Trump Media stock began trading on March 25, at a price of $57.99 per share. At the time, a sum of $1,000 would be enough to buy 17 full DJT shares.
At press time, DJT stock was trading at $35.85 — a figure that equates to a 38.17% drop from the March 25 price. Accordingly, 17 Trump Media shares would now be worth $609.45. However, for simplicity’s sake, let’s say that you also bought fractional shares, and just apply the 38.17% loss to the $1,000. By doing so, we end up with $618.30
There’s quite a significant catch here — Trump Media did not go through your typical IPO. Instead, it merged with Digital World Acquisition Corp (DWAC), a special-purpose acquisition company (SPAC). In simple terms, a SPAC is a publicly traded shell company that merges with a private business — thereby allowing it to sidestep the lengthy and rigorous process that a normal IPO entails.
So, you could have invested in DWAC before March 25 — and since the merger was announced way back on October 20, 2021, it’s safe to assume that some investors did exactly that. On January 1, 2024, a single DWAC share was trading at just $17.45. The current price of Trump Media stock is 105.44% higher — meaning that a $1,000 investment would now be worth $2,054.
Featured image via Shutterstock
