Why Trump Media Stock Sank 15.2% Last Month but Is Gaining in July

Key Points

• Trump Media stock saw a double-digit sell-off last month despite a bullish rally for the broader market.

• The company continued to make moves in the crypto space, but new ETF filings and other developments didn't result in gains for the stock.

• Trump Media's share price has seen some recovery momentum in July's trading.

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Trump Media & Technology Group (NASDAQ: DJT) stock lost ground in June's trading despite a very strong bullish backdrop for the broader market. The company's share price fell 15.2% across the stretch, according to data from S&P Global Market Intelligence. The S&P 500 gained 5% in the month, and the Nasdaq Composite rose 6.6%.

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While signs emerged in June that macroeconomic conditions could be aligning to power a sustained rally for the stock market, Trump Media wasn't able to participate in the bullish momentum. There weren't any major developments that suggested big new challenges for the company last month, but sell-offs across the stretch suggested that investor confidence in the company's cryptocurrency strategy was wavering.

Trump Media stock sank in June as crypto moves failed to ignite a rally

Trump Media kicked off June's trading with sell-offs following a report about a recently launched stablecoin affiliated with the Trump family. According to CNBC, the USD1 token has seen relatively soft adoption following its launch in March. While weak adoption for the USD1 stablecoin doesn't necessarily have substantial and immediate implications for Trump Media, the token was created by World Liberty Financial -- a company the Trump family owns a majority stake in through another one of its businesses.

As the month progressed, Trump Media submitted filings to the Securities and Exchange Commission (SEC) detailing the creation and foundations of its Truth Social Bitcoin and Ethereum ETF. Per the disclosures, the new exchange-traded fund (ETF) will have 75% of its assets invested in Bitcoin and the other 25% invested in Ethereum.

While the new ETFs could turn into performance drivers for the company, the news about the funds failed to spur any significant bullish momentum for Trump Media stock. On the other hand, there was an indication that the company believed its shares were undervalued after the sell-off. The company submitted a filing on June 23 revealing that its board of directors had authorized $400 million in stock buybacks.

Why is Trump Media stock gaining in July?

Following last month's sell-off, Trump Media stock has seen some recovery momentum in July. The company's share price is up roughly 6% in the month so far.

On Monday, Trump Media announced that it had launched its Truth+ streaming platform globally. The Newsmax channel has also been made available internationally through the Truth+ apps. While the company has monetized its social media and streaming businesses at very low levels, it has continued to make pushes to expand their reach.

Trump Media stock has also seen gains in conjunction with The Truth Social Crypto Blue Chip ETF, which the company submitted filings for yesterday. The ETF will hold Bitcoin, Ethereum, Solana, Cronos, and XRP. Bitcoin will account for 70% of the fund's invested assets, while Ethereum, Solana, Cronos, and XRP will account for 15%, 8%, 5%, and 2%, respectively. There are no signs that the company is abandoning its social media businesses, but it looks like cryptocurrency investments are becoming the bigger focus.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.