New York CNN —
Former President Donald Trump’s social media company suffered a sudden nosedive in the stock market Tuesday that briefly halted trading and left traders scratching their heads.
Truth Social owner Trump Media & Technology Group was trading sharply higher during a volatile session at about $31 per share when it swiftly collapsed below $29 shortly after 2:40 p.m. ET on heavy trading volume.
Nasdaq paused trading for Trump Media at 2:42 p.m. ET for five minutes, a routine cooling-off period that exchanges are required to impose during times of heavy volatility.
When trading resumed, Trump Media initially bounced back before plunging below $27.
The owner of social media platform Truth Social ended the day down 10%, and 20% below its high of the day.
There did not appear to be any new developments or announcements that would explain the sudden plunge. But Trump Media is a notoriously volatile stock.
Matthew Tuttle, CEO of Tuttle Capital Management, told CNN he suspects the selloff was caused by technical factors. He said that when Trump Media’s share price failed to break through its 200-day moving average, a closely-watched technical level, traders “flipped” to bet against it.
Up until Tuesday afternoon, Trump Media had been on fire.
The stock had more than doubled its value in the span of three weeks, a stunning move driven by polling and betting odds that suggest the race for the White House could go either way.
“Sometimes the bottom falls out of these types of moves pretty quickly,” Tuttle said in an email.
University of Florida professor Jay Ritter noted that trading volume in shares of Trump Media was “enormous” on Tuesday.
“With meme stocks, where many of the holders are playing short-term momentum strategies, when the tide turns, everyone wants to move in the same direction,” Ritter said, describing Trump Media as a meme stock akin to GameStop and AMC.
Ritter said that while it’s “rare” to see a multibillion-dollar company plunge like this with no news, meme stocks are subject to sudden moves because they are being driven by momentum, not fundamentals.
At Tuesday’s peak, Trump’s stake of 114.75 million shares in the company was worth $3.88 billion on paper. But by the end of the day, the value of that stake had dropped to $3.1 billion.
This is the second recent trading halt for Trump Media. Last month, Trump lashed out at Nasdaq over the routine action, threatening to move the listing to the New York Stock Exchange.
Trump Media shares climbed 2% higher in after-hours trading.
