What’s behind Trump Media’s recent rally?

A week ago, market observers (and political wonks) were wondering just how low shares of Trump Media (Nasdaq: DJT) were going to go. But despite long-standing fears of insider selling and a steady 10-day decline in the company’s share price, Trump Media’s DJT stock is surging recently.

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Although the stock is still well below its 52-week high of $79.38, share prices for Truth Social’s parent company have jumped about 30% in the past week. The stock has rebounded from a 52-week low of $11.75 on September 24 to more than $16 on Monday. And shares closed up slightly again on Tuesday.

What’s driving the trades—and what caused the shift in sentiment? Here’s what you need to know.

Why have investors turned bullish on Trump Media stock?

A large portion of Trump Media stock is owned by individual investors, many of whom are fans of Trump himself. So they’re largely perennially bullish on the company. But the recent stock surge seems to be a sigh of relief by many that Trump has kept his vow to not sell his shares in the company.

Trump made a pledge on September 13 to hang onto his 114.7 million shares of DJT stock, which represent a greater than 56% stake in Trump Media and are worth about $1.9 billion. Still, there was some trepidation among shareholders. With the lockup period now long past (he has been able to sell shares as of September 19), that nervousness is fading and that’s fueling people to buy more, which is sending the price higher.

Did any insiders sell their DJT stock?

Trump held onto his shares, but some insiders didn’t hesitate to sell when they had the opportunity. After the lockup ended in September, United Atlantic Ventures, a partnership of former Apprentice contestants Andrew Litinsky and Wes Moss, unloaded 11 million shares, virtually its entire holdings. That represented 5.4% of the total shares in Trump Medias.

Are short sellers driving the price of Trump Media higher?

That’s unclear, but it’s certainly possible. Traders who bet the company’s share price would continue to drop amid the sell-off (by borrowing shares to sell and buy back at a lower price) may have come upon deadlines to return those, which could have boosted the stock price.

Short positions on September 13 (the number of shares being shorted) numbered 14.5 million, more than double the amount of short sellers Trump Media saw when it began trading publicly in March.

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How much is the election playing into the rise in DJT’s stock price?

It’s hard to separate Trump Media from Trump the candidate, even for investors. The fact that the election is still essentially a dead heat in certain critical swing states is fueling optimism on both sides. Trump’s meeting with Ukrainian president Volodymyr Zelenskyy last week may have been seen as a positive sign by Trump Media bulls.

Is the insider selling at Trump Media over?

That is, quite literally, the multimillion-dollar question. Despite his insistence that he has no plans to sell his shares, Trump has been known to change his mind with little warning. Selling now, though, could be a bad political move, as supporters of Trump Media might feel abandoned if he increases his personal wealth (or uses the stock to pay one of several big judgments he faces) just weeks before the election.

Meanwhile, there’s also the lingering question of Patrick Orlando’s intentions. Orlando’s ARC Global Investments sponsored the SPAC that merged with Trump Media, and he recently won a case against Trump Media, with a judge ordering the company to deliver a larger stake in the company to Orlando, saying TMTG had breached its contract with ARC.

Orlando has not declared any intention to sell his shares, but he no longer has a role at the company, which may worry some investors.

This post originally appeared at fastcompany.com
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