Truth Social Trading Frenzy Shouldn’t Concern The SEC

This past week, the stock price of Trump Media & Technology Group (TMTG), the parent company of Donald Trump’s social media start-up Truth Social, has been on a rollercoaster ride. The stock, trading under the ticker symbol DJT, has experienced significant volatility, with prices swinging wildly from day to day. In its inaugural week of trading on the NASDAQ, DJT stock surged by as much as 50%, only to plummet by 21% the following Monday in response to the revelation of a $58.2 million net loss against a meager $4.1 million in revenue for the year 2023. Despite the fluctuations, TMTG managed to maintain a market cap of about $6.2 billion as of earlier in the week.

The volatility of DJT stock is sparking debate, with some online commentators arguing that this is indication of a need for stronger regulation. Proponents of this view likely believe that the wild swings in DJT stock prices are a symptom of a broader problem in the market, where speculation and hype can drive prices far beyond a company’s fundamental value. They may worry about harms to investors, particularly retail investors without the expertise or resources to navigate such turbulent markets.

Critics of DJT are likely to latch on to a proposed regulation from the SEC painted as a cure-all against technology-induced speculation. The SEC proposal is related to the use of predictive data analytics (PDA) by broker-dealers and investment advisers. The proposed rule, which has yet to be finalized, would require financial firms to identify and eliminate conflicts of interest associated with the use of PDA technologies, such as artificial intelligence and machine learning, in their interactions with investors.

Read the full article on Forbes.