Shares of former President Donald J. Trump’s social media company are soaring on the expectation he will win next week’s presidential election.
Over the past six weeks, the stock of Trump Media & Technology Group, the parent group of Truth Social, is up more than 300 percent. That includes a rise of nearly 9 percent on Tuesday, in a choppy trade that saw the stock halted several times because of excessive volatility.
After bottoming out late last month, the stock has roared back, approaching the record high set just days after it made its Wall Street debut in March, following its merger with a public shell company.
Trump Media’s market value rose above $10 billion on Tuesday, making Mr. Trump’s majority stake worth about $6 billion.
The value of the company is largely divorced from the fundamentals of a relatively small, loss-making social media platform. Some employees recently sent a letter to Trump Media’s board complaining about the leadership of its chief executive officer, the former California congressman Devin Nunes.
In a report on Tuesday, the market research firm S3 Partners said the rise in Trump Media’s stock had closely mirrored Mr. Trump’s odds in prediction and betting markets, which have increasingly shifted toward expecting victory for Mr. Trump on Election Day. That outcome would probably benefit Truth Social, which has served as Mr. Trump’s primary online megaphone for reaching his supporters and attacking his enemies.
Trump Media shares also are getting a push from the fact that the stock is difficult for bearish investors, known as short sellers, to bet against.
S3 noted that, given Mr. Trump’s large stake, a limited supply of shares were available for short sellers to borrow in order to close out their positions. This limited supply has made Trump Media vulnerable to a so-called short squeeze: a scenario in which bearish investors are forced to quickly close out bets to avoid losses, which pushes the price even higher.
S3 estimates that short sellers have lost about $322 million during Trump Media’s recent run-up in price.
It is believed that much of the stock buying is coming from individual investors, many of them supporters of the former president. At last count, the company estimated it had about 600,000 shareholders, almost all small investors.
Henry Schwartz, a vice president at CBOE Global Markets, said that the trading in options in Trump Media shares was largely consistent with trades placed by individual investors. Options are a way for investors to make bets on the future direction of stock and can sometimes be used to hedge against a sharp increase or decline in the price of the underlying stock.
Trump Media’s stock could move 50 percent higher in the coming days, S3 said, but also warned that it could just as easily “become worthless if Trump were to lose.”