Oct 23, 2021 - Economy & Business

Trump's volatile return to the stock market

Data: YCharts; Chart: Axios Visuals 
Data: YCharts; Chart: Axios Visuals 

Donald Trump this week became both a meme stock and a social-media entrepreneur at the same time, by announcing that a new company called Trump Media & Technology Group was going to merge with an existing company listed on the stock market.

Why it matters: The medium-term promise of Trump's media company is that it will replace Twitter for anybody wanting to keep track of Trump's messages. The short-term promise is that it can be a hot new speculative vehicle for people wanting to get rich quick in the stock market.

By the numbers: More than 625 million shares of Digital World Acquisition Corp. traded on Thursday and Friday. That's 20 times the total number of shares outstanding — a sign that the stock has become an ultra-short-term trading vehicle rather than any kind of long-term investment.

The intrigue: Trump's latest dalliance with the stock market has already created monster profits for a small number of insiders.

  • Large purchases of both shares and warrants in the SPAC taking Trump's social-media company public were made on Wednesday, before the official announcement of the merger.
  • 675,000 shares were bought at $9.96 each, as well as 525,000 warrants at $0.52.
  • The total purchase price, on Wednesday afternoon, was just under $7 million. By 10am on Friday morning, those securities were worth $106 million and $39 million respectively, for a total profit in less than 48 hours of $138 million.

Where it stands: For the time being Trump's company barely exists — it doesn't even have a CEO.

  • Trump will control the company if and when it merges with his media startup — likely making him the controlling shareholder of a public media company and a presidential nominee at the same time. Anybody who bids up the price of the company's shares will automatically enrich Trump himself.
  • Flashback: Trump's last company to go public, Trump Hotels and Casino Resorts, ended up filing for bankruptcy within a decade.

The bottom line: One word is likely to characterize both the Trump campaign and the share price of his company: Volatile.

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