Trump Media & Technology Group Corp (NASDAQ: DJT) saw a 9% dip in premarket trading on Tuesday, following a substantial 31% surge on Monday. This spike came amid a broader rally in markets linked to the so-called “Trump trade.”
The significant rally on Monday was triggered by an assassination attempt on the Republican candidate, which heightened expectations of his victory in the upcoming November election. Stocks in sectors such as cryptocurrency and firearms, along with other companies potentially benefiting from a Trump presidency, also experienced gains.
Trump’s survival after being shot in the ear bolstered his lead in betting odds over President Joe Biden. These odds increased further on Monday after Trump selected U.S. Senator J.D. Vance as his running mate and received the Republican Party’s official nomination at their national convention in Milwaukee.
Trump Media, the parent company of the social media platform Truth Social, has seen its shares soar by 132% in 2024, as retail traders bet on Trump’s potential second term.
However, analysts at Citi caution that while Trump currently leads in election odds, the boost following the assassination attempt might wane in the coming months.
“The assassination attempt on former President Trump will likely result in a short-term boost in the polls, which may partially fade by November,” they noted. “Historical instances suggest a minor initial increase in poll numbers that may then partially reverse.”
Trump reappeared in the public eye at the Republican National Convention on Monday evening, receiving a warm welcome from thousands of supporters just two days after the attempt on his life. Meanwhile, the Wall Street Journal reported that Tesla (NASDAQ: TSLA) CEO Elon Musk plans to contribute around $45 million per month to a new super political-action committee (PAC) supporting Trump’s presidential campaign.
This group, named America PAC, includes notable backers such as Palantir Technologies (NYSE: PLTR) co-founder Joe Lonsdale, the Winklevoss twins, former U.S. ambassador to Canada Kelly Craft, and her husband, Joe Craft, the CEO of Alliance Resource Partners (NASDAQ: ARLP).
Analysis:
The market’s reaction to the assassination attempt on Trump highlights the volatility and sensitivity of stocks linked to political developments. The surge in DJT stock reflects investor sentiment that a Trump presidency could lead to favorable policies for certain sectors. However, as analysts suggest, this initial boost may not sustain long-term, requiring investors to closely monitor political and market developments.
Profit Potential:
Investors who capitalized on the initial surge in DJT stock could have seen significant short-term gains. Those who bought shares prior to the event would have benefited from the stock’s 31% jump on Monday. However, the subsequent 9% pullback underscores the importance of timing and the potential for rapid market reversals.
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