Trump Media & Technology Group (NASDAQ: DJT), the parent company of the social media platform Truth Social, has seen strong, sudden upward movements in stock price in the last couple of weeks — particularly as poll numbers remain close and prediction markets show increased odds of a second Donald Trump presidency.
Notably, DJT stock price has increased by 56.60% over the last thirty days. However, on October 15, Trump Media share prices rapidly declined by 9.65%, triggering a Nasdaq mechanism that suspends trading when unusual volatility occurs.
At press time, DJT was trading at $27.06 — the media mogul and presidential candidate’s company is still up 55.07% year-to-date (YTD).
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Trump Media stock price crash explained
On the day of the crash, DJT shares opened at $32.20 — by 10 a.m. Eastern Time (ET), they had reached an intraday high of $33.54. After that, it retraced back down to $31.40, following which it traded in the $32 – $33.5 range.
From 1.45 p.m. the stock enters a prolonged downswing — going from $32.20 to $30.54 by 2.35 pm. This is followed by a very sharp drop — by 2.42 p.m., prices have dropped to $28.95, and Nasdaq suspends trading.
The suspension only lasted for approximately five minutes — but the damage had already been done — if anything, traders were spooked by the halting of trades, and DJT share prices dropped to $27.06 by the closing of the day, having experienced a 9.65% drop.
Possible causes behind DJT crash
This abrupt reversal has sparked widespread speculation and discussion. The Nasdaq’s mechanism for suspending trading isn’t a particularly rare sight — however, its exact criteria are unknown.
There’s no doubt as to the fact that this was, indeed, an unusual spike in volatility — and it could have been caused by short sellers. Although the short volume ratio for Trump Media collapsed from 61.29% to 37.46% between October 11 and October 14, it recovered to 47.47% on October 15 — the total number short volume rose from 11,286,606 to 22,800,891 on the day.
One theory that has been put forth is that Trump has sold off a portion of his equity in the company — although the former president had previously promised that he would not do so. If this is the case, the Republican candidate has two business days to file a Form 4 submission with the SEC — meaning that it should be public either on October 16 or October 17.
Trump Media shares have previously been sold in vast quantities by insiders — so it’s possible that another insider, rather than Trump himself, is doing the selling.
Another line of thinking sees the correction as a sign of profit-taking — Trump Media stock prices are fundamentally tied to the former president’s chances of reelection, and volatility will only increase as we inch toward November — for investors and traders that piled on early, Tuesday could very well have been a great time to cash out.
Still, others point to Trump’s contentious Bloomberg interview at the Economic Club of Chicago — although it should be noted that this is unlikely, as Trump’s policy vagueness has historically done little to decrease his odds of political success.
