Trump's stock surges on the last day before the election

Shares of the social media company associated with a former U.S. president saw a significant increase on the day before the presidential election. Trump Media & Technology Group, the parent company of Truth Social, experienced a 12% surge. The reason behind this spike is unclear.

The stock, noted for its volatility since its market debut in March, first increased fourfold in five weeks and then dropped by 41% in the recent trading sessions. Investors have linked its performance to the perceived electoral prospects of the former president. If the former president is re-elected, Truth Social might gain importance as a communication tool, akin to how Twitter was used previously for official announcements. Conversely, a victory by the opposing candidate could diminish its business outlook.

The stock valuation is not aligned with the company's fundamental business health, which is dwarfed by larger competitors like X, TikTok, and Instagram. The company is facing financial challenges, reporting under $1 million in quarterly revenue.

Despite the tight race in polls, betting markets have recently favored the former president over the vice presidential candidate. Analysts suggest this trend might have positively influenced the stock's performance. As the vice presidential candidate gained ground on these platforms, the media stock's value sharply declined, impacting the former president’s net worth significantly. Monday’s increase boosted his net worth by over $400 million.

The former president's re-election odds showed some recovery, yet the stock's Monday gains lacked a definitive link to any specific developments, diverging from slight shifts observed in prediction markets. The absence of significant announcements or statements further clouds the stock’s sudden rise. The stock is characterized as a 'meme stock,' reflecting its unpredictable nature.

Meanwhile, broader market indices like the Dow, S&P 500, and Nasdaq exhibited minor volatility, with each experiencing slight downward movement.