Trump Media Stock Price in Free Fall as It Files to Issue More Shares
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The company behind Donald Trump’s Truth Social has been public for just a few weeks, but the stock price has plunged 50% from its first full day on the market. Trump Media filed with the SEC on Monday to issue 21 million more shares of DJT stock, and made the first steps towards allowing Trump to resell some of his own shares, according to Bloomberg. DJT’s stock price fell18% to $26.61 on Monday.
The SEC filing shows that Trump Media plans to increase the number of available shares by 15%, CNN reports. This could devalue the shares of existing DJT shareholders, including Trump Media’s largest shareholder, Donald Trump himself. The filing also included a provision that could allow Trump and other insiders to one day sell their stock, after an initial lockup period expires in Sept.
Another section of the SEC filing titled “Risks Related to President Donald J. Trump,” discloses that Trump Media’s success depends on the former President’s reputation and the outcomes of his ongoing legal proceedings. The filing discloses other risks unique to Truth Social because of “its offerings and the involvement of President Donald J. Trump,” including the active discouragement of users, harassment of advertisers, and increased risk of hacking.
Also on Monday, Trump stepped into a New York Courthouse for the first day of his criminal trial. The former President has been charged with 34 felony counts by a Manhattan district attorney for his alleged role in an alleged hush money scheme.
Last week, two of Trump’s co-founders made a bid for the right to sell their Trump Media stock in the next six months, according to Barron’s. Wesley Moss and Andrew Litinsky, former contestants on The Apprentice, filed an amendment to their ongoing lawsuit against Trump asking to be exempt from a lockup provision. This amendment is part of Moss and Litinsky’s lawsuit against Trump filed in Feb., claiming the former President deprived the co-founders of a proper stake in Trump Media, according to The Washington Post.
Trump responded to Moss and Litinsky’s February lawsuit by suing them back a month later claiming they failed to properly set up Trump Media. At the moment, Trump Media is caught in a complicated web of legal battles between co-founders, major investors, and the SPAC that Trump Media was borne out of, The Washington Post reports.
The former President’s stake in Truth Social’s parent company has lost roughly $2 billion since March 28, when DJT’s price closed at $58. Though Trump is bound by the lockup agreement, he could be especially reliant on DJT’s stock price. Trump faces millions of dollars in legal fees, and his social media company once seemed like his saving grace.
Despite Trump Media’s disappointing stock performance, many investors see the stock as a direct way to support Donald Trump. A report from The Washington Post featured several Trump supporters saying they would keep their dollars invested in Trump Media, even as the price falls.
Truth Social’s stock price has been a roller coaster in the last few weeks. DJT’s stock price climbed to a high of $77 on its second day as a public company but has since plummeted. Short sellers have flooded the stock, as over 5 million shares of Trump Media have been shorted, according to CNBC. DJT became the most expensive stock to short against a few weeks ago, according to Reuters, though some still seem willing to do it. DJT is now a mainstay conversation topic on r/wallstreetbets, adding credit to the claim that Trump Media is a meme stock.
Truth Social offered Donald Trump a platform for years when few others would give him one. Now the social media company’s stock is buoying the former President’s net worth, allowing Trump supporters to invest in him. The DJT stock is emblematic of Trump himself, proving to be a massively divisive issue that investors can’t seem to agree on.
