Or so goes the old stock market aphorism, and, sure, it’s a good one. But it also explains this:
Former President Donald Trump lashed out at Nasdaq over a routine trading halt in shares of his social media company and even threatened to move the listing to the New York Stock Exchange.
“Why is NASDAQ halting the sale of DJT?” Trump said Friday on Truth Social, referring to the ticker symbol of Truth Social owner Trump Media & Technology Group. “What right do they have to do this? They have done it twice today. What’s going on?”
Trump suggested Nasdaq was “taking orders from the SEC,” an agency he accused of delaying Trump Media’s merger “for political reasons.”
What happened is Trump Media’s stock, which trades on the Nasdaq Composite, skyrocketed on Friday, after Trump himself made very big news: He announced he won’t be selling shares in the company.
That spike was so big that it triggered two five-minute trading pauses designed to provide a cooling period. [CNN/Business]
The trading halts are a non-sequitur, which I suspect Mr Trump put out there in order to keep his base enraged, banking on the likelihood that his base will be ignorant of standard procedures and take it as persecution. Heck, I wasn’t aware of this procedure, although it makes sense on its face.
The real news is that, as I bolded above, Mr Trump will not be attempting to sell out of his company. I think investors chose to read this as Mr. Trump having confidence in his company’s future. But now investors need to consider these questions:
- What is Mr Trump’s investment term? Five years? Five months? Five minutes? All of these are congruent with his statement. And keep in mind Mr. Trump is quite old at this point; it may not make sense for him to make a promise on the order of decades.
- When he does sell out, what does the company have? Will he even continue to use Truth Social? He is its star attraction, after all.
- If his investment term is best measured in a few days, that is, his statement is effectively a lie, then is it true that this is a sophisticated pump ‘n dump, once again taking advantage of MAGA-heads who are naive, vulnerable investors?
- Does his business history, both in Truth Social and his other businesses, justify a continuing stake in Truth Social?
DJT – Click to enlarge.
In other words, and in reference to that hoary old aphorism, above, Truth Social was sitting near or at the bottom of its market cap range when he published that remark; it then regained a small amount of value. I won’t be the least surprised if he continues to publish remarks that burnish the image of Truth Social. Some of it will be double talk, as the SEC frowns on outright lies concerning publicly traded companies and their stock – and a SEC frown can lead to a term in the pokey. But he may try to double talk his company back to some price level where he’ll feel that he can make an acceptable amount of money by selling out.
Nor is it out of the realm of the possible that the price will rise on its own. Not that I think the MAGA-heads or the QAnon types have the kind of buying power to raise the price of DJT more than momentarily. However, a foreign adversary may prop the price up using the resources of a big nation, if they see advantage in putting Mr. Trump in a position where he owes them something. Their investment would not be in hopes that DJT goes up in price, except to the extent that it makes Mr. Trump happy, but rather they hope that Mr. Trump will attain the Presidency, again – and they can hope to manipulate him.
The next month’s behavior of DJT may prove very interesting.
