A New York jury recently handed down a historic ruling. Former President Donald Trump was found guilty of all 34 counts of falsifying business records in his criminal trial on sealing fees. The ruling sparked market opposition$Trump Media & Technology (DJT.US)$Stock concerns caused its stock price to drop 15% during Thursday's after-hours trading. As of press release, it was still down more than 8% in night trading.
The case involved Trump paying actor Stephanie Clifford a $130,000 seal fee during the 2016 election campaign to prevent her from revealing her indecent relationship with Trump through his attorney Michael Cohen. New York state prosecutors accuse Trump of falsifying business records and returning Cohen's advance payments in installments in the name of “attorney fees” to cover up election violations. On May 30, local time, members of the jury in charge of the “sealing fee” case of former US President Trump handed down a verdict, verifying Trump's 34 felony charges of falsifying business records in this case.
Trump Media, as a company that owns the social networking platform Truth Social, experienced sharp fluctuations in stock prices after merging with the shell company Digital World Acquisition Corp. Although the company's market capitalization once reached about 9 billion US dollars, its net loss in the first quarter was as high as 327.6 million US dollars, and revenue was less than 1 million US dollars. Trump personally holds 65% of the company's shares, and due to the blockade clause in the merger agreement, he is unable to sell or borrow its shares within six months of completing the deal.
The market's reaction to Trump's guilty verdict was relatively stable, with the exception of Trump media stocks, most financial assets remained unchanged. However, this ruling may have an impact on markets that are already preparing for the 2024 US presidential election, and Trump is expected to face off against incumbent US President Joe Biden.
Wall Street analysts have mixed opinions on this ruling. Ed Yardeni, founder of Yardeni Research, pointed out that although the stock market is generally not affected by domestic political turmoil, Trump's ruling may increase the turbulence in the political climate, thereby affecting the fluctuation of the stock market.
Other analysts believe that it is currently unclear how this ruling will affect Trump's campaign, and further observation of sentencing risks and market reactions is needed.
Adam Phillips, general manager of investments at EP Wealth Advisors, said that the market may be nervous about the reaction to this ruling, but it is expected that any market weakness related to this will be short-lived. He recommended investors continue to focus on drivers of long-term returns, such as profit growth and economic prospects.
Foreign exchange market analyst Kyle Chapman at Ballinger Group believes that the most likely outcome is a fine, which is unlikely to affect Trump's chances of re-election. He pointed out that it is necessary to observe the reaction of public opinion polls to the ruling, because if Trump's chances of election are affected, it may have a significant impact on the future, especially considering the geopolitical tension and trade war that Trump's election may bring.
Overall, although Trump's guilty verdict shocked Trump Media shares in the short term, the market remains wait-and-see about the long-term impact of this incident. Investors and analysts generally believe that political uncertainty may increase market volatility, but eventually the market will return to fundamentals and focus on the long-term performance of the economy and enterprises.
Editor/Jeffrey
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