'Do not wait': Forbes analyst warns Truth Social stock at risk of 'worry-based selling'
In a column for Forbes, one financial analyst is recommending that investors who jumped on Trump Media & Technology Group stock may want to beat the crowd and sell off their shares before panic selling begins.
The stock, which has been battered since a report was issued showing that the parent company of Truth Social has been bleeding cash, has briefly stabilized at just over $40 following a high of $79.28, has seen more than its share of ups and downs, and according to John S. Tobey, now might be the time to get out after the recent slight uptick in value.
As he explained, "On April 15, Trump Media filed the SEC Form S-1 in order to register all of the newly merged company’s shares for sale. That started the clock ticking for the SEC approval followed by a potentially large selloff."
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Noting that some investors got in at the $20 level, nervousness about the stock's long-term value could "open the floodgates" for profit-taking.
"Certainly, do not draw a trendline based on the stock’s 8-day rise. Many shareholders acquired their shares at low prices. Having waited through the ups and downs, they might prefer to realize their profits and move on," he suggested. "Then there is the classic psychological trend reversal effect. With DJT hitting $70 a month ago, and now about $40, up from the low $20s, any weakening could encourage worry-based selling. (Especially, if last week's rise through the $35 barrier does not hold.)"
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With that in mind, he advised "Do not wait" for a potential wave of sellers to start dumping their shares.
"Investing successfully means running for cover when the floodgates open. Waiting to see if floodwaters really are coming means getting swept downstream," he warned before adding, "Wall Street is filled with successful investors who 'sold too soon.' After all, you can always buy back if the waters recede. Or, more likely, you just go another direction where the sun is shining on dry land."
You can read more of his analysis here.