A single sentence boosts stock price excitement, Trump Media Company instantly surges 30%

Perhaps Trump's verbal attacks on the Federal Reserve cannot hinder the Fed's actions, but his rhetoric is still very influential in some cases, at least for the media companies he controls.

On Friday, September 13th, Eastern Time, the stock price of Trump Media & Technology Group (referred to as Trump Media) surged during trading hours. In less than half an hour, the intraday gain expanded rapidly from slightly over 1% to nearly 30%, before quickly falling back. Within 20 minutes, more than half of the gain was retraced, and the stock ultimately closed up by about 11.8%.

More than one media outlet pointed out that the surge in Trump Media's stock price on Friday was attributed to a statement made by Trump himself. While attending a campaign event in California that day, he stated that when the lock-up period for his Trump Media shares expires next Friday, September 20th, he has "absolutely no intention of selling" his holdings. Trump explicitly stated:

"No, I'm not going to sell. The reason the stock price dropped is because many people thought I would sell. I can understand that, but I have absolutely no intention of selling."

Trump Media currently operates a social media network called Truth Social, which is a competitor to X. On March 26th this year, the company went public on Nasdaq through a merger with a special purpose acquisition company (SPAC) named Digital World Acquisition Corp (DWAC). Trump holds 1.1475 billion shares of Trump Media, accounting for 57%. According to the regulations related to SPAC listings, there is a lock-up period of approximately six months for the shares of the listed company.

Some analysts have suggested that due to concerns that Trump or other major shareholders may sell a large amount of stock after the lock-up period, causing greater selling pressure, Trump Media experienced a bleak seven-week decline, resulting in the evaporation of billions of dollars in market value. Trump's speech this Friday directly addressed these investor concerns. He said:

"Many people think I will sell my shares. What I mean is, they (these shares) are worth billions of dollars. But I don't want to sell my shares. I won't sell my shares. I don't need the money."

As of the opening on Friday, the market value of Trump's holdings in Trump Media was approximately $1.85 billion. As long as he does not sell, for every $1 increase in the stock price, the nominal value of his holdings will increase by about $115 million. However, Trump Media has experienced a significant overall decline since its listing. Despite the sharp rise in stock price this Friday, as of the close of trading on Friday, it had fallen by over 77% from the intraday high of $79.38 on March 26th, and by over 50% from the high reached after Trump was assassinated on July 15th.

Some media estimates that if the stock price of Trump Media falls below $13, then Trump's unrealized gains since the merger with DWAC will disappear. If the stock price drops to $12.88, the value of Trump's shares will be lower than the upper limit of the company's private valuation range as of December 15th last year, which was $1.478 billion.

Other media outlets point out that Trump Media has always been a meme stock favored by retail investors. Despite the company's meager basic business income and lack of profitability, its valuation has soared to astonishing levels. For some, this stock represents, to some extent, the probability of Trump being elected president.

The media mentioned that with Trump returning to the social media platform X, formerly known as Twitter, the correlation between the election probability and the stock price has been disintegrating in recent weeks. However, Wall Street Observer noted that after the first televised debate between Trump and Harris on Tuesday night, Trump's trading activity further declined, leading to a sharp drop of about 10.5% in Trump Media's stock price on Wednesday, hitting the lowest closing record since its listing in March