By Brett Arends
Buy on the rumor, sell on the news
President Donald Trump is dominating the political scene in Washington, D.C., and the news and developments around the country and the rest of the world. Probably not since Franklin Roosevelt in 1933 has an incoming president made such an impact so quickly.
But these “Trump times” are providing tough times so far for MAGA investors.
Since Trump’s inauguration in January, shares in the president’s stock-market vehicle, Trump Media & Technology Group (DJT), have plummeted. The $Trump (TRUMPUSD) and $Melania (MELANIAUSD) cryptocurrencies have collapsed. And Elon Musk is currently counting the cost of his close association with the Trump administration and MAGA Nation: Tesla’s stock price (TSLA) has nearly halved since the inauguration, costing Musk, the company’s CEO, nearly $100 billion.
Ouch.
“Buy on the rumor, sell on the news,” as they say on Wall Street, and when it comes to Trump financial bets, that’s definitely been the profitable trade – so far, anyway.
Take Trump Media & Technology Group, which owns the president’s Truth Social, a rival to Musk’s X. Donald Trump is using the platform to make announcements and comments, but that’s not helping outside investors. The stock price has halved since the inauguration, from $40 to $20. If you bought the stock on Election Day, you’ve now lost more than 40% of your money. Actually, you’re in the red if you bought the stock at almost any point in the past year.
‘DJT’ became public through a reverse merger: Effectively, Trump merged his Truth Social operation with a paper “shell” company that was already on the stock market. If you bought this stock after Trump won the Iowa caucuses in January last year, when its price hit $50, or when the merger completed in the spring, when it hit $66, you are right out of luck.
The smart move was to buy the stock before Trump won the Iowa caucuses, when the share price was $17, and sell it immediately afterwards for a fast 200% profit. Your correspondent (who is not allowed to make speculative stock-market bets with his own money) has kicked himself for not writing that story ahead of time.
It would also have been a smart move to buy the stock during a lull in March, when it was as low as $36, and then sell during the frenzy at the end of the month when the merger was completed and the ticker changed.
There was also a chance to make money buying the stock following the presidential debate in September, when Democratic nominee Kamala Harris was ahead in the polls and the Trump campaign seemed to be in the doldrums.
But in each case, you wanted to cash out when the good news hit – Trump winning the Iowa caucuses, winning the election, getting inaugurated.
You had to be even nimbler to make a buck from the cryptocurrencies, or meme coins, launched by the president and the first lady. Both were launched on the weekend before the Monday, Jan. 20, inauguration. According to price data monitored by cryptocurrency website Coinmarketcap.com, in both cases you had to buy the coins and then sell them again within hours to make a buck. By the time Trump took the oath of office, they were already in free fall.
Oops.
As for Tesla: The collapse in the stock price has wiped nearly $600 billion off the company’s market value since Jan. 20.
The stock is now back to where it was just before the election – and where it was when Trump left office in January 2021, for that matter.
Tesla’s stock boomed after last fall’s presidential election. You have to assume plenty of buying came from MAGA Nation. What else had changed? Elon Musk had been one of then-candidate Trump’s biggest cheerleaders and had already been tapped to join the administration to run the budget-cutting “DOGE” team.
The stock went from $213 before the election to $480 by mid-December.
It should have been painfully obvious that Musk’s Washington, D.C., adventure posed enormous business risks for the company. On a Venn diagram, there is very little overlap between “people who buy electric vehicles like Teslas” and “people who vote for Donald Trump.” Meanwhile, how many things can Musk do at the same time?
Tesla now risks becoming the Bud Light of the left. The beer brand cratered two years ago when a marketing tie-up with transgender TikTok personality Dylan Mulvaney sparked a boycott by conservative beer drinkers.
Turns out “people who buy Budweiser beer” and “people who are enthusiastic followers of transgender influencers on TikTok” is another Venn diagram with very little overlap.
Maybe Musk can build up the Tesla brand among MAGA Nation by entering Teslas in Nascar races, or Cybertrucks in a demolition derby. Recent news about the Cybertruck may make you wonder how that would work out. But I bet a lot of people would watch.
Tesla is especially vulnerable because it is such a “growth” stock. Unlike so-called value stocks, such as Bud Light parent Anheuser-Busch InBev (BUD), Tesla’s stock-market valuation depends overwhelmingly on hopes for the future rather than profits in the here and now.
Tesla’s stock still sells for an eye-watering 80 times forecast annual earnings, even after the fall in the stock price.
Anheuser-Busch shares, by contrast, sell for just 16 times forecast annual earnings.
“Elon Musk,” jokes a Wall Street friend, “is now the Rudy Giuliani of electric vehicles.”
Former New York Mayor Giuliani, once a national hero, is among those counting the cost of his close association with Donald Trump.
It should be noted that not everyone has lost out from these ventures. Trump and his family members have a cost basis of effectively zero in his stock and cryptocurrencies, meaning every nickel of remaining value is profit. Trump’s 115 million ‘DJT’ shares are still worth about $2.3 billion, even at today’s stock price. His 80% share of all outstanding $Trump “coins” is valued at around $1.8 billion, according to CoinMarketCap data. The residual value of all $Melania coins is about $380 million.
Meanwhile, if you are a fan of ironies, Anheuser-Busch InBev, which collapsed after MAGA fan Kid Rock launched the boycott two years ago, is now booming. It’s up 30% since Jan. 20.
-Brett Arends
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
03-22-25 0930ET
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