Shares of Trump Media (NASDAQ: DJT), the parent company of Truth Social, surged by 19% on Tuesday, continuing the stock’s upward momentum for the fourth straight day.
This marks the longest streak of gains since June, as investors appear to rally behind the company despite recent management changes and ongoing financial challenges.
The stock reached an intraday high of $22 during heavy trading, with over 34 million shares traded by mid-afternoon, nearly triple the 30-day average volume.
Trump Media, majority-owned by former President Donald Trump, has now climbed 80% from its September 24 low of $11.75. However, the stock remains well below its March peak of $79.38.
What’s driving the DJT rally?
The recent surge in Trump Media’s stock coincided with a high-profile rally held by Donald Trump over the weekend in Butler, Pennsylvania.
The event drew thousands of supporters and featured a notable endorsement from Tesla CEO Elon Musk, who publicly backed Trump for the 2024 presidential election.
Musk, addressing the crowd, stated that Trump “must win to preserve democracy in America,” giving a boost to the former president’s campaign and, by extension, to the stock of his media company.
The endorsement from Musk, a high-profile figure in tech and business, may have helped fuel optimism among retail investors who see Trump Media as more than just a financial investment but also as a political statement in support of Trump’s candidacy.
DJT’s challenges
Despite the stock’s recent surge, Trump Media has faced several internal challenges.
Last week, the company disclosed that its chief operating officer, Andrew Northwall, had resigned in late September, with no clear explanation provided and no successor announced.
In addition, its chief product officer, Sandro de Moraes, and several lower-level employees have also departed, raising concerns about the company’s leadership stability.
Further complicating matters, Trump Media is set to hand over nearly 800,000 shares of common stock to ARC Global Investments II, following a judge’s ruling that the company breached a stock agreement with the early investor.
This comes on the heels of a major share sale by a company controlled by two of Trump Media’s co-founders, which divested nearly all of its 11-million-share stake shortly after early investors were permitted to sell their holdings.
Trump Media’s financial health remains shaky
Despite the rally, Trump Media’s financial health remains shaky.
The company reported net losses of over $340 million on revenue of less than $2 million in its most recent quarterly filings.
Truth Social, the company’s flagship platform, continues to attract only a fraction of the audience commanded by major social media competitors like X (formerly Twitter) and Facebook.
Nonetheless, Trump Media maintains a market capitalization exceeding $4 billion, underscoring the level of investor enthusiasm for the stock—possibly tied to Trump’s political prospects.
Trump owns nearly 57% of the company, a stake worth $2.5 billion as of Tuesday, and has vowed not to sell his shares.
While Trump Media’s stock has rallied, analysts caution that the company’s long-term financial viability remains uncertain.
With ongoing management upheavals, legal challenges, and slow revenue growth, the company still has significant hurdles to overcome.
However, for investors banking on Trump’s political success and his media platform’s potential, the stock’s recent surge may represent an opportunity to ride the wave of optimism.
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