These stocks have already seen wild swings — and the volatility could just be getting started

October 30, 2024 | 02:55pm

The Trump-linked stocks set to make wild moves as election approaches

These stocks have already seen wild swings — and the volatility could just be getting started

Three stocks are generating buzz among day traders banking on a Donald Trump victory next week. Retail investors have increasingly focused in on Trump Media & Technology , Rumble and Phunware as stocks that can benefit if the Republican presidential nominee for president prevails. That's already sent the names on wild moves — and they could be in for more as Americans head to the ballot box. Some of these stocks have clearer connections to the former president than others. Trump Media & Technology, which owns the alternative social media platform TruthSocial, trades under a ticker — DJT — that's also the initials for the business mogul-turned-politician. Phunware made Trump's campaign app, while Rumble is a video platform focused on conservatives. To be sure, these trades are considered risky due to high volatility and poor financials. None of these companies turned a profit in 2023. Trump Media, which has the largest market cap of the three, was still less than 25% of median S & P 500 stock size of $37.6 billion. On top of that, few — if any — analysts on Wall Street cover these names. The latest NBC News poll also shows the race between him and Vice President Kamala Harris is in a dead heat. "Making financial bets based on which stocks you think will do best based on an election outcome is not new," said Christopher Schwarz, a finance professor at the University of California Irvine whose research focuses in part on retail traders. But when it comes to names like DJT, "these stocks have no fundamental reason to be at any price close to the price they're at." Still, these names are bound to make headlines and appearances on forums like Reddit's WallStreetBets in the runup to and directly following the election. CNBC compiled more information about these names and what's driving interest from some traders: Trump Media & Technology The TruthSocial parent has gained the most attention given the nominee's stake valued at more than $5 billion as of earlier this week. He holds around 114 million shares, which amounts to ownership of more than half of the company. The stock has seen volatile trading over recent days as voting day draws closer. Shares dove more than 20% on Wednesday, reversing course after jumping more than 8% the day prior. Before Wednesday, the stock had seen a pre-election rally. It pulled the shares out of a slump that at one point sent its price below the $12 mark. On Tuesday, it closed at $51.51. Shares are now more than 160% higher in October, which would mark its first positive month since March. Year to date, they are up more than 140%. Trump Media has seen the highest daily net inflows from retail investors of the year over recent days, according to data analyzed by Vanda Research. That underscores the pour into the name amid the pre-election rally. On Tuesday alone, retail traders were net buyers of Trump Media to the tune of $14.4 million. It's also been the most discussed stock on WallStreetBets, the popular Reddit page for meme stock traders, over the last seven days, according to data from Quiver Quantitative as of Wednesday afternoon. The stock has been named more than 17,000 times on the forum this year, the firm said. The U.S. president and vice president are largely exempt from government conflict of interest rules. Still, Trump would be the first to hold office while controlling a publicly traded company. His DJT holding equates to nearly 75% of his net worth. Trump has said that he has no plans to sell his position. "There's never been, I don't think, any particular case where the potential future President of the United States probably has such a direct economic impact on particular firms," said UC Irvine's Schwarz. Schwarz said there's no reason for Trump Media to even be publicly traded given its business fundamentals and high price-to-sales ratio. Given that, he said trading is based solely on "speculation." "Trump Media has no fundamental value — it's worthless," he said. "That's why the outcome of the election probably has such a big impact on what the price of the stock is." Trump Media reported a loss when looking at net income and EBITDA in 2023. The company had 36 employees as of the end of last year. Phunware and Rumble The other two stocks have a less direct connection to the Republican candidate. Phunware is billed as a mobile software and blockchain company. Beyond the Trump campaign app, Phunware lists Marriott, Atlantis and the Mayo Clinic among clients on its website . The stock has seen major swings over the past year, trading as high as above $24 and as low as below $3. The company employed just 25 people at the end of 2023 and saw losses when looking at net income and EBITDA that year, per FactSet. Phunware has also seen an uptick in net inflows from everyday investors in October, according to Vanda data. Shares have surged more than 140% in the month. It's also up more than 80% in 2024, on track to snap a two-year losing streak. PHUN YTD mountain Phunware, year to date All four analysts polled by LSEG have buy ratings on the stock. The average price target implies shares can rise nearly 90% above the $15 mark. To be sure, price target estimates vary widely within this group — from as low as $8 to as high as $20. Rumble, on the other hand, hasn't seen a similar spike as Nov. 5 gets closer. Still, the company is viewed as a Trump-connected play given its video platform that's popular among conservatives. The company employed just under 160 people at the end of last year and also posted losses on net income and EBITDA in the year. It went public in September 2022 with the backing of PayPal cofounder Peter Thiel. Shares have risen 13% in October, bringing its year to date gain to 36%. Shares have traded within a tighter range over the last 52 weeks, sitting between $3.33 and $9.20. The two analysts surveyed by LSEG both have hold ratings on the stock. Both have an $8 price target, which suggests shares can climb more than 34% over the next year. — CNBC's Robert Frank and Fred Imbert contributed to this report.

This story originally appeared on: CNBC - Author:Alex Harring