Over the past month, the stock price of the company that hopes to merge with Donald Trump’s new media outfit has surged by almost 25 percent, a move that seems counterintuitive given that the proposed deal is under investigation by both the Department of Justice and the SEC, reports New York Magazine. By comparison, the S&P 500 rose only 9 percent in its July rally.
Could the Trump true believers who are still buying and holding the stock — 94 percent of its investors are individuals, not institutions — be falling for another Trump grift?
While retail investors are still buying, smart-money institutional investors are betting the shares will go down, as the company’s prospects seem to worsen by the week under a steady stream of negative news.
Trump Media has been beset by controversy, executive departures, and technical difficulties ever since its existence was unveiled last October, when it sought to cash in on a financial craze with a plan to raise something like $1 billion by merging with Digital World Acquisition.
“The fact that the DOJ is looking at it is going to give the SEC more pause about allowing this deal to go forward,” says Robert Jackson, a former SEC commissioner who is now a professor at New York University School of Law. Read more.
