Introduction
Donald Trump, the former US president, has been indicted on charges of business fraud by a grand jury in Manhattan. Investors have responded by sending shares of stocks with connections to Trump soaring. The companies that have seen the most significant increases are Digital World Acquisition Corp., the blank-check firm seeking to merge with Trump’s media venture; Phunware, which is the company that developed the Trump campaign’s mobile app used during the 2020 presidential race; and Rumble – a conservative video platform that partners with Trump’s Truth Social app. In this article, we will explore these Trump-related stocks in more detail and discuss the effects of Trump’s indictment on their prices. We will also explore the possibilities for investors and the risks associated with investing in these Trump-related stocks.
Three Trump-related stocks surge after Trump’s Indictment
The three stocks associated with Trump witnessed a significant surge last week following the news of Trump’s indictment. We have discussed these stocks below.
Digital World Acquisition Corp. (DWAC)
Digital World Acquisition Corp. is a special purpose acquisition company (SPAC) that has seen its stock surge by over 10% following news of Trump’s indictment. DWAC is seeking to merge with Trump’s media venture, the Trump Media and Technology Group (TMTG), which owns Truth Social, a Twitter knockoff.
The surge in DWAC’s stock price suggests that investors believe criminal charges against Trump could bring attention to Truth Social, thereby boosting advertising revenue and helping Trump’s business. However, early data suggests that this may not be the case.
Phunware
Phunware is a mobile app development company that created the Trump campaign’s mobile app for the 2020 presidential race. The company’s stock rose by 3% following news of Trump’s indictment, although it is unclear why investors sent the stock soaring.
Phunware has not announced any direct connection to the Trump Media and Technology Group or Truth Social. However, the company has been criticized in the past for allowing right-wing extremist groups to use its platform. Investors may believe Phunware’s ties to the Trump campaign could benefit the company if Trump’s followers migrate to Truth Social.
Rumble
Rumble is a conservative video platform that partners with Trump’s Truth Social app. The company’s stock rose by 3.1% following news of Trump’s indictment. Rumble has not announced any direct connection to the Trump Media and Technology Group, but the company could benefit; if Trump’s followers migrate to Truth Social.
Understanding the risks involved in investing in Trump’s related stocks
The news of Trump’s indictment has no doubt increased the risks involved in investing in Trump-related stocks, and investors need to understand the situation before proceeding to invest in these stocks. Although these stocks have soared following the news, there is no guarantee that the uptrend could be sustained.
For instance, following Trump’s indictment, the deal between DWAC and TMTG has been stalled, and the shares could easily tumble after that. DWAC stock has already fallen from its high of $16.48 to its current price of $14.42 over the weekend. This is comparable to the previous news moments, such as when Trump hinted at his 2024 presidential run, causing shares to temporarily spike before they declined again. And there are possibilities we might experience such again.
Additionally, investors should also try to use the best online trading brokers while trading these stocks to reduce their risks exposure.
Conclusion
The surge in the stock prices of companies with connections to Trump following news of his indictment suggests that investors believe criminal charges will help Trump’s businesses. Additionally, it is unclear why investors sent shares of Phunware and Rumble soaring, and the effects of Trump’s indictment on these stocks could be short-lived. Hence, investors should always manage their risks properly while trading Trump-related stocks.
