DJT stock rebounds ahead of election. Here's why.

Trump Media & Technology Group stock has been booming since plunging to record lows last month.

Shares of former President Donald Trump's social media company rose more than 20% to $47.36 on Monday, their highest since June.

Trump Media's comeback has brought billions in paper assets to Trump, who owns nearly 57% of the company. His stake is now worth over $5 billion.

The stock's rise in the last few days before the election is a sure sign that investors are betting that Trump will take back the White House.

Polls suggest the race is deadlocked, but “the perception is that he's winning now,” Matthew Tuttle, CEO of Tuttle Capital Management, told USA TODAY earlier this month.

The other driving force? The stock is full of short-term speculators.

Monday's stock rise came not as Trump's chances of winning the election significantly increased, but rather after Trump's six-hour rally at New York's Madison Square Garden, which drew thousands of his supporters wearing red MAGA hats.

“DJT continues to be exceptionally volatile on a daily basis as there are speculators pursuing short-term momentum strategies. They buy when the price goes up, which pushes the price even higher,” said University of Florida finance professor Jay Ritter.

Meme stocks like Trump Media thrive on attention, Ritter said.

“Today’s rally was driven by that attention and then multiplied by momentum traders,” he said. “However, the higher the price goes, the greater the downside potential. This stock is incredibly risky.”

Trump Media is not guided by business fundamentals. It is a small player in the world of social media that is making losses and generating almost no revenue.

In August, the company reported a net loss of $16.4 million on revenue of just under $837,000. The company has also been hit by litigation and reports of management unrest.

His main attraction is Trump. Trump Media would increase in value if the next president were the majority shareholder, as its flagship product, Truth Social, is the Republican presidential candidate's megaphone of choice.

On the other hand, a loss to Vice President Kamala Harris could hurt the stock.

In regulatory filings, Trump Media, which operates under the vanity ticker DJT, made clear how important Trump is to the company's brand and warned that its value could “diminish” if Trump's popularity wanes.

“If he wins, they could do something with this company,” Tuttle said of Trump. “If he loses, I don’t see any way to keep him afloat.”

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