Former President Donald Trump’s personal stake in Trump Media & Technology Group surpassed $6 billion in March, when its shares soared after its debut. debut on the public marketNearly six months later, that fortune has fallen to less than $2 billion due to losses and falling revenues.
After months of declines, the stock’s valuation has fallen more than 70% since its peak in late March, and the stock hit a new low on Wednesday. As the largest shareholder in Trump Media & Technology, Trump has suffered the biggest losses, although the decline is only on paper for now, as he has yet to sell a single share.
Trump owns about 60% of Trump Media & Technology Group, a money-losing social media company that trades under the ticker symbol DJT (the former president’s initials). The company has gained a following among Trump supporters, typically retail investors who have flocked to groups on Truth Social to express concern about the stock’s decline and to blame short sellers for the stock’s plunge.
“Just one question: why doesn’t (Trump Media & Technology Group) just suspend trading in the stock (based on, say, company information) while they check for any manipulation,” a member of the DJT investor group wrote on Truth Social on Wednesday. “That would send the short sellers scrambling!!!”
Shares of Trump Media fell $1.10, or 6%, to $16.98 on Wednesday, their lowest price since they began trading in March.
But short sellers (investors who bet on a stock’s decline by borrowing shares and then buying them if it falls, allowing them to lock in the difference) aren’t responsible for the company’s falling stock value, according to Ihor Dusaniwsky, managing director of financial data firm S3 Partners. For one thing, there are very few shares available for short selling, he noted.
“With trading volume of 5.3 million DJT shares today, even if every share available to borrow were sold short today, that would represent less than 8% of today’s trading volume,” Dusaniwsky told CBS MoneyWatch. “The movement in DJT’s stock price over the last two weeks is primarily due to short selling, not long selling.”
Trump Media did not respond to a request for comment.
Here are three reasons why Trump Media’s stock is under pressure.
Meme Stock Behavior
Analysts have previously noted that Trump Media’s stock tends to behave similarly to so-called “meme” stocks, which are companies whose stock prices are driven more by buzz and social media than by underlying business fundamentals, such as revenue or earnings growth.
For example, after Trump survived an assassination attempt in July, Trump Media’s stock price has climbed by more than 30%Polls at the time also gave him the edge in the November presidential election.
But about a week later, President Joe Biden dropped out as the Democratic nominee and was replaced by Vice President Kamala Harris, who has surged in the polls and is now neck and neck with Trump in key battleground states. according to in the latest CBS News poll.
Since Biden’s decision to step down on July 21, Trump Media’s shares have lost 51% of their value.
Decrease in income and losses
Truth Social may have a Trump fan base, but that hasn’t yet translated into profits or increased revenue.
Last month, Trump Media reported that its second-quarter revenue fell 30% from a year earlier to $836,900. The company also said it lost $16.4 million in the quarter, a smaller deficit than its $22.8 million loss in the same period a year earlier, according to a regulatory filing. The company blamed the decline in ad sales on a change in revenue sharing with one of its advertising partners.
Recent advertisers on Truth Social include companies selling ivermectin, the antiparasitic drug some have touted as a miracle cure for coronavirus and other diseases, as well as conservative dating sites, Truth Social hoodies and MyPillow.
A blockage that is about to expire
Finally, Trump’s media is nearing the end of a so-called blocking clausewhich has so far prevented Trump and other company executives from selling their shares.
These lockups, a common restriction on Wall Street, are designed to prevent big investors from selling their shares in a company shortly after it goes public. That’s because massive sales of shares by insiders can cause a company’s stock to plummet.
That lockup period will expire on September 19, allowing Trump and other insiders to sell their shares in the company. While it’s unclear whether some will do so, the possibility of such sales could also contribute to the stock’s volatility.
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