Achi news desk-
After a short-lived honeymoon, former President Donald Trump’s media company is experiencing a rough reception on Wall Street. Trump Media & Technology Group – which trades under the ticker DJT, its initials – fell 18.4% in trading on Monday, a fall that follows a 21% drop last week.
The sharp drop in value comes after Trump Media, whose main asset is the social media platform Truth Social, on Monday filed a document with the US Securities and Exchange Commission that opens the door for a potential sale of millions of future shares. The document, known as an S-1, relates to securities held by investors that can be converted into shares of stock, as well as shares held by company insiders.
The filing also includes all the shares held by the former president. Trump, however, remains under a “lock-up” deal that largely restricts him from selling his shares for about another five months. His son, Donald Trump Jr., who is a director on the board, and CEO Devin Nunes, are also bound by the shutdown.
The stock plunge has wiped billions from Trump’s stake — at least on paper. The shares soared when they began trading on March 26, valuing Trump’s 57% ownership position at $6.25 billion. But after DJT’s recent collapse, that stake is worth $2.1 billion, representing a paper loss of $4.15 billion.
Overall, shareholders have lost $7.2 billion in value since the stock hit a high of $79.38 on March 26. The shares fell $5.98, or 18.4%, to $26.61 on Monday.
When companies issue additional shares, they take the risk that their stock price will come under downward pressure. That is, in part, due to the simple laws of supply and demand — with more stock available, a company’s share price tends to fall unless there is a commensurate increase in demand.
So far, supporters of the former president are a significant part of the company’s investor base, with Trump Media CEO Nunes praising their support to Fox Business earlier this month. On Truth Social, some investors said they believed the stock would recover, while others said they were taking advantage of the stock risking to buy more shares.
“Buy more today just like many of you,” wrote one member of the Truth Social group dedicated to DJT shares on Monday. “I believe time is our friend. Half a year until election. I can definitely hold on until then at least.”
Other supporters on Truth Social noted that Monday’s filing does not necessarily mean Trump plans to sell any of his 57% ownership stake in Trump Media.
“Trump has NOT indicated intentions to sell his shares,” Chad Nedohin, a pastor and musician, wrote on Truth Social on Monday. “There is no new unexpected issue of new shares. The increase in the total number of shares in the S-1 is for the warrants.”
The S-1 filing is typically filed quickly after the SPAC deal closes, usually within 15 or 30 days, said Kristi Marvin, founder of SPACInsider.com, which specializes in SPAC deals.
Trump Media & Technology Group did not immediately return a request for comment.
200,000 new retail investors
Trump, who relies on Truth Social as his main social media platform, has about 7 million followers on the app, where he often blasts his critics and promotes favorable polls. He has also turned to Truth Social to talk about his criminal case, which began on Monday, on charges of falsifying business records relating to “hush money” payment..
About 600,000 retail investors have bought shares in the Trump Media & Technology group, with about 200,000 of them buying into the stock within the past few weeks, Nunes told Fox Business earlier this month. He called these small investors “the most amazing part about our company.”
Those investors have had a wild ride since the stock began trading as DJT on March 26. The shares soared in its first two days of trading, but have since lost more than two-thirds of their value.
Such swings have prompted comparisons with the so-called “meme” stocks. like GameStop, which typically attracts individual investors based on social media buzz, rather than traditional investor-preferred metrics, such as revenue and profit growth.
Last year, Trump Media lost $58 million on revenue of $4.1 million — about half the annual sales booked by a single Chick-fil-A location.
—With a report from the Press Connection.
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