By Saqib Iqbal Ahmed
NEW YORK (Reuters) - The chaotic debut of Trump Media & Technology Group has captivated market participants, as its shares went on a wild ride in which the company's valuation soared to $9 billion before tumbling.
The stock's gyrations have drawn traders hoping to profit from its wild swings and caused sharp fluctuations in the net worth of former President Donald Trump, a majority shareholder.
Here are a few charts showing the factors seen behind the stock's mercurial moves.
Shares of Trump Media last stood at $32.41, some 54% lower than the price they started trading at on March 26. The stock market debut of the Truth Social operator followed its merger with blank-check company Digital World Acquisition, which was announced in 2021 but suffered setbacks and delays.
Trump’s net worth has swung along with the stock price. The value of the Republican presidential candidate's majority stake was pegged at more than $6 billion when the shares hit a high of $79.38 on March 26.
That catapulted his net worth to about $6.5 billion, earning Trump a spot on the Bloomberg Billionaire Index — a ranking of the 500 richest people in the world — for the first time ever. The value of his holdings now stands at about $2.6 billion.
Although six-month lockup restrictions could prevent Trump from selling or borrowing against his holdings in the media company, the increase in his net worth could provide a timely windfall as he appeals a $454 million civil fraud judgment against him.
The stock has drawn interest from short sellers: investors seeking to sell borrowed shares in the hopes of making money when the stock price falls.
Even before the company started trading under the "DJT" ticker, short sellers had piled into bearish bets on Digital World Acquisition, selling about 16% percent of its free float short, making it the most shorted Special Purpose Acquisition Company, or SPAC, as of March 25, the day it stopped trading, according to data from S3 Partners.
Shorting SPACs is often more difficult than betting against ordinary stocks due to the lack of availability of shares from stock lenders, analysts said.
About 12% of the DJT free float is presently sold short, according to S3 data. DJT is the most expensive stock to borrow among stocks with at least $50 million of short interest, the firm’s data showed.
"It is the primary reason we are not seeing significant short selling in the stock," said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
Trump Media's stock options drew a rush of bullish activity in the first few days after their market debut. Trading activity has settled down since, but remains robust.
The stock's options now show an accumulation of open contracts that have strike prices at opposite ends of the spectrum, from $2.5 put options to $100 call options.
"The trading is very active and expresses the divergent opinions about the stock. There are high concentrations of open interest in both out-of-the-money puts and calls," said Steve Sosnick, chief strategist at Interactive Brokers (NASDAQ:IBKR).
"It seems safe to say the speculators – looking for big moves in either direction – are doing much of the trading."
Traders don't expect the stock to settle down anytime soon. Trump Media's 30-day implied volatility - a measure of near-term stock swings - stands at 160%, signaling a roughly 10% daily price swing. The five most actively traded options names sport an average 30-day implied volatility of about 44%, Trade Alert data showed.