Shares of Trump Media & Technology Group, the majority-owned company by former U.S. President Donald Trump, witnessed a sharp decline on Tuesday, reaching record lows, following Trump's recent return to rival social media platform X. The drop in Trump Media shares was substantial, with the stock hitting a low of $21.33, down over 4%. The day ended with a 3.7% decrease, closing at $21.42, marking the eighth consecutive session of losses.

Investor confidence in Trump Media has been undermined by the gradual narrowing of Trump's lead in polls and election betting markets over the past few weeks. Some retail traders had viewed the company's stock as a gamble on Trump's prospects for a second presidential term. Earlier this month, Trump Media reported disappointing financial results, with a quarterly loss of $16.4 million and revenue of just $837,000. As a result, the company's market value has experienced a significant drop from over $8 billion earlier this year to approximately $4.3 billion.

Furthermore, the upcoming expiration of the insider lockup period is adding to the growing concerns surrounding Trump Media. When the lockup expires next month, Trump will be able to cash out his nearly 60% stake, which amounts to 114.75 million shares in his social media company. This pending event has fueled market uncertainty and contributed to the stock hitting record lows.

The recent resurgence of Trump's online presence on the X platform is another factor impacting Trump Media's stock performance. Trump began posting on the rival social media platform last week after a hiatus of nearly a year, coinciding with an interview with owner Elon Musk. However, his return has not managed to halt the downward trend in the stock's value. Trump has faced a decline in polls compared to Vice President Kamala Harris, who is the Democratic candidate, with just 78 days remaining before the November 5 vote.

Contracts for a Harris victory are currently trading at 56 cents on the PredictIt politics betting platform, offering a potential $1 payout. On the other hand, Trump contracts have dropped to 46 cents, down from a high of 69 cents in mid-July. These figures indicate a shift in the betting market's sentiment towards the upcoming election.

It is noteworthy that sports gambling has been surging in popularity, with users increasingly using funds from their brokerage accounts to support this habit. According to BYU Marriott School of Business Assistant Professor of Finance Jason Kotter, individuals are diverting their investments from stocks to online sports betting. On average, households that engage in online betting spend about $1,000 per year, withdrawing roughly $2 from their brokerage accounts for every dollar placed in sports betting. This trend is particularly prominent among financially constrained households. While it is unclear which specific stocks or investments are experiencing the most outflows, the impact is being felt across various brokerage platforms, including Robinhood and Vanguard.

As the market continues to adjust to the shifting dynamics in the political landscape and the growing popularity of online sports betting, investors will closely monitor Trump Media & Technology Group's stock performance and anticipate the expiration of the insider lockup period next month to see how it may further impact the company's value.