Trump Media Stock (DJT) - A Possible Positive Surprise

Search for "Trump Media stock" and a flood of negative articles appear. The writers see little hope, and many say Donald Trump is going to sell despite his press conference assurance to hold his 115 million shares.

But hold on... There is a presumption associated with the September 20 unlocking of millions of Trump Media shares. Having watched their shares fall 70% over the past four months, the locked-up shareholders are expected to run for the exit. However, there is more to the sell decision than dumping the stock at the first chance they get.

Imagine you hold a million locked-up shares of DJT. Would you tell your broker to put in a trade ticket reading, "Sell 1,000,000 shares of DJT at market"? Of course not. You know you would probably get the low price of the day, if not the month or year. The current value of those million shares is still sizable - $15,000,000. So, you would likely hire a professional to handle the trade to maximize the proceeds, not minimize the time. Therefore, expect all those large DJT shareholders are doing the same. And that means the short sellers’ hoped-for high volume, panic selling might not materialize.

Now, take the next logical step. Anyone who wants to buy at the recent ever-lower prices has been waiting for Friday's expected selloff. This pent-up demand, like that of the short sellers with their millions of shorted shares, are ready to buy when the stock drops below Thursday’s 2024 low of around $15. In other words, there are buyers out there, waiting to take advantage of the expected selloff.

But there is another issue that could cause the selloff to sputter. Today's $15 price is a major technical barrier. Therefore, even if the stock falls below, the chart readers will be watching to see how the stock behaves - not just on Friday, but also the days and weeks following. If there are signs of stabilization and strengthening, new buyers could enter the market.

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And then there is the Reddit crowd who enjoy taking on Wall Street, especially short sellers, when a "meme" stock looks desirable. Their buy, hold, and buy more strategy could mesh with the technicians’ views of an opportunity in the works.

And then... The circle comes back around to those million+ shareholders who can now sell. While an unexpected stabilization/strengthening might cause some selling, it could also build hopes that the stock will lose its short-selling anchor and return to a higher price level, thereby attracting more buyers.

But what about the low fundamentals?

Remember, Trump Media's primary fundamental is Donald Trump. It is why the stock, even at $15, sells well above a typical fundamental evaluation. Add in the stock's potential strengthening and the Trump brand could likewise strengthen.

The bottom line - Contrarian investing is a challenge

An appropriate saying is that when you hear "stock market" and want to throw up, it is time to buy. Likewise, with "Trump Media stock" today.

Note: Author established a position in DJT today (Sept. 19)