Donald Trump’s charge toward the Republican presidential nomination is fueling a speculative frenzy in a corner of the US equity market, setting off rallies in obscure stocks seen as tied to his candidacy.
The gains have echoes of the pandemic’s meme-stock mania, when legions of day traders piled into a handful of money-losing companies, seeking to pocket quick gains when their share prices surged.

PSQ Holdings Inc., an online marketplace that says it caters to “freedom-loving Americans” and had just $3 million in revenue over the first nine months of last year, jumped 25% Monday before pausing the advance Tuesday. The company is worth just $154 million.

Shares of Fannie Mae and Freddie Mac — the mortgage-finance giants that have been in the federal government’s hands since the Great Financial Crisis — climbed to hit two-and-a-half year highs. And Phunware Inc., a money-losing software company that designed the app for Trump’s 2020 campaign, has climbed over 400% this year — to around 43 cents a share.

Then there’s Digital World Acquisition Corp., the special-purpose vehicle whose planned merger with Trump Media & Technology Group has been held up for more than two years by regulatory issues. It surged 88% Monday and extended the jump Tuesday, leaving up 190% this year at more than $50.

Trump's 2024 Push Fuels Meme-Like Rallies | Gains come amid optimism around presidential prospects
There remains a significant risk that the acquisition won’t close, which would hit shareholders with deep losses. But as Matthew Tuttle, the chief executive officer of Tuttle Capital Management, put it: “Right now that doesn’t matter. Trump makes this the memeist of all meme stocks and it is trading like one, so valuation is out the window.”

Speculative Boomlet
The speculative boomlet stands in contrast to the broader stock market, which so far is treating the election as little more than background noise, with the focus squarely on the trajectory of the economy and whether the Federal Reserve will cut interest rates this year. Analysts in general have been hesitant to make stock picks based on the outcome of the November vote, given the significant uncertainty of the outcome.

There have been previous rallies in companies seen as linked to Trump’s return to the White House, including in 2021. But the magnitude of the recent gains have drawn attention since he’s long been seen as the Republican frontrunner.

Fannie and Freddie Join Rally
The rises have also extended beyond the usual suspects to companies like Fannie Mae and Freddie Mac, whose stocks are traded over-the-counter, amid speculation that a second Trump administration would move to privatize the companies. During his presidential term, Trump backed an attempt to return the mortgage companies to private control which could’ve brought big returns to investors, though it was never enacted.

While Digital World’s stock has long been tethered to Trump, the recent rally hasn’t been accompanied by any shift in the likelihood of the merger closing.

Jay Ritter, a University of Florida finance professor who studies initial public offerings and SPAC, said the company’s recent trading price suggests that Trump Media — whose main asset is the Truth Social site — is worth more than $8 billion. He said that seems “very, very rich” given it brought in less than $5 million in revenue in the first nine months of last year and is losing money. Investors would only get just over $10 a share if the deal collapses.

Others Gain Steam
Video platform Rumble Inc., which has a pact with Trump Media, added $502 million to its valuation after striking a deal with controversial media firm Barstool Sports. The gains were kickstarted last week after Trump’s large victory in the Iowa caucuses, with returns over the past six sessions topping 90%.

West Palm Beach, Florida-based PSQ Holdings, whose website Public Square sells politically-themed merchandise aimed at Trump’s base, was a later entrant to the Trump rally. It gained Monday after struggling to gain traction since it went public via blank-check merger, though it was little changed Tuesday as he faced off against Nikki Haley in the New Hampshire primary.  

“At some point they have to pull back but New Hampshire is somewhat up in the air as far as how much he is going to win by,” Tuttle said of Digital World. “Positive developments for Trump could move it higher.” 

This article was provided by Bloomberg News.