Trump Trade: In or Out?

Over the last few weeks, there's been a passel of stocks that move up or down in tandem with the polling and betting fortunes of Donald J. Trump. As the election draws near, is that trade now over?

It’s undeniable that Trump Media and Technology Group (ticker: DJT)—owner of the underwhelming Truth Social social media app—acts with the news-driven volatility of a meme stock. Think Gamestop. Though DJT’s recent foray into streaming looks promising—with a potential menu of conservative content typically eschewed by left-wing media and entertainment overlords—the company does not yet turn a profit, let alone generate cash flow remotely connected to its lofty valuation (up roughly 117% in the last month even after a “yuge” recent decline). Much of that gain was due to a merciless short-covering rally, as many DJT bears hit the panic button. At its peak, DJT was worth more than the New York Times, making Mr. Trump, its majority shareholder, a billionaire many times over (on paper).

Since buying the dip has often been rewarded in this name, it might make sense to start nibbling again should the stock fall below recent bottoms under $20. But why? As a vote of confidence well before election day, DJT made sense. However, with Election Day only a few days away, few events will dramatically move the needle on this news flow proxy. Even Biden calling Trump supporters “trash” didn’t halt DJT’s recent decline.

And what if Trump wins or—God help investors—loses? What’s the unique buying proposition, then? There isn’t one outside of buying DJT to curry favor with the Administration—in the spirit of Trump Hotel DC during his first term—but that won’t affect the retail bro pod investors who’ve bid up the stock. Truth Social streaming could get “bigly” into the content production and procurement game against the likes of Apple, Disney, Netflix, and Prime, driving a higher valuation based on paid subscribers (mainstream advertisers have so far eschewed the partisan platform). But that would likely not get DJT near its highs above $100 a share.

Even more discouraging for DJT bulls: we are seeing DJT disconnect from its catalysts and pair trades. Trump’s Polymarket betting odds of winning remain high, but DJT is declining. That hasn’t happened before. While Harris has moved slightly ahead again in Michigan and Wisconsin, per RCP, she is still on track to lose the Electoral College vote and popular vote. Yet DJT is way down despite this good news. While the Bitcoin trade via Coinbase (COIN) and Micro Strategy (MSTR) still pairs with DJT—Trump is seen as more supportive of cypto than Harris, with plans to fire SEC Chair Gary Gensler—that might be just coincidence and hype, or something unique to Bitcoin.

I think it makes sense to short DJT here. What say you?