Trump Media & Technology Group's stock (DJT) has tumbled to an all-time low, with its market capitalization shrinking from over $10 billion to approximately $1.65 billion. The sell-off may intensify following the Democratic Party's decisive victories in both the Senate and the House of Representatives during the midterm elections.
Democratic control raises political and legal risks
The Democrats secured a comfortable majority in the Senate, flipping seven seats to reach 54 members, with the possibility of adding Alaska. They also won a large majority in the House. This outcome is a significant setback for President Donald Trump, who had relied on Republican majorities to shield his administration from oversight. With Democrats now in control, Trump is widely expected to face impeachment proceedings, and his status as a lame-duck president diminishes his political leverage.
More critically for investors, the Democratic majority grants congressional committees investigative powers, including the ability to issue subpoenas. This opens the door to formal inquiries into Trump Media's operations, particularly its subscription service that offers early access to Trump's social media posts. According to reports from Reuters and Bloomberg, several high-frequency trading firms, including Jump Trading and Susquehanna, have paid $100,000 for this package, and the company previously stated it had signed up more than 10 clients. Congressional investigations typically introduce heightened volatility for the companies involved.
Additionally, Trump Media's proposed merger with TAE Technologies, announced in December, may come under scrutiny. The 50/50 merger is intended to combine Trump Media with TAE, which continues its work in nuclear fusion. Investigators could examine the terms and timing of the deal.
Core business shows signs of deterioration
Truth Social, Trump Media's primary product, is experiencing declining engagement. Monthly website traffic has fallen to approximately 15 million visits, and this trend is likely to continue as Trump loses support among various voter groups. His decision to initiate military action against Iran alienated anti-war Republicans, while many independents who backed his campaign have become disillusioned.
The company's financial performance remains weak. In the third quarter, Trump Media reported a net loss of over $238 million, with adjusted EBITDA losses widening to more than $223 million. Revenue growth appears unlikely in the near term, raising questions about the company's ability to sustain its operations.
Bitcoin holdings provide a silver lining
One positive note is Trump Media's substantial Bitcoin holdings. The company holds 12,062 coins, making it the 10th-largest publicly traded holder of the cryptocurrency. If Bitcoin's rally continues, the company's balance sheet could improve, offering some support to its valuation.
Technical outlook points to further downside
From a technical perspective, DJT stock has been in a persistent downtrend. The daily chart shows the price breaking below the critical support level of $6.97, its June low. The stock now trades below all major moving averages and the Supertrend indicator, while the Relative Strength Index (RSI) and MACD continue to trend downward. Given these signals, the most likely scenario is continued decline, with the next key support level around $5.
This article is for informational purposes only and does not constitute financial advice.
