After a short honeymoon, former President Donald Trump’s media company is getting a rough reception on Wall Street. Trump Media & Technology Group – which trades under the symbol DJT, its initials – fell 18% Monday afternoon, a drop that follows last week’s 21% drop.
The sharp drop in value comes after Trump Media, whose main asset is Truth Social, the social media platform, filed a document with the US Securities and Exchange Commission on Monday that opens the door to the future potential sale of millions of shares. The document, called the S-1, covers warrants held by investors that can be converted into stock, as well as stock held by company insiders.
The file also includes all the shares owned by the former president. Trump, however, remains subject to a “lock-up” agreement that largely prevents him from selling his shares for about five more months. His son, Donald Trump Jr., who is a board director, and CEO Devin Nunes, are also bound by the lockdown.
The stock plunge wiped billions of dollars from Trump’s stake — at least on paper. Shares soared when they began trading on March 26, giving Trump’s 57% stake a value of $6.25 billion. But after DJT’s recent crisis, that stake is worth $2.1 billion, representing a theoretical loss of $4.15 billion.
In total, shareholders have lost $7.2 billion in value since the stock hit a high of $79.38 on March 26. Shares fell $6.01, or 18.4 percent, to $26.58 Monday afternoon.
When companies issue additional shares, they take on the risk that their stock prices will come under downward pressure. This is due, in part, to the simple laws of supply and demand: with more inventory on hand, a company’s stock price tends to fall unless there is an increase proportional to demand.
So far, the former president’s supporters make up a significant portion of the company’s investor base, with Trump Media CEO Nunes praising their support on 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’s fall to buy more shares.
“I bought more today, like many of you,” a member of a Truth Social group dedicated to DJT stock wrote Monday. “I think time is our friend. Six months until the election. I can definitely hold out until then at least.”
Other Truth Social supporters noted that Monday’s filing does not necessarily mean Trump plans to sell part of his 57% stake in Trump Media.
“Trump has NOT signaled his intention to sell his shares,” Chad Nedohin, a pastor and musician, wrote on Truth Social on Monday. “There is no unexpected new issuance of new shares. The increase in the total number of shares in the S-1 relates to warrants.”
S-1 filings are typically made quickly after a 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 respond to a request for comment.
200,000 new individual investors
Trump, who relies on Truth Social as his primary social media platform, has about 7 million followers on the app, where he frequently lambasts his critics and promotes favorable polls. He also turned to Truth Social to denounce his criminal trial, which began Monday, on charges of falsifying business records related to a hush money payment.
About 600,000 retail investors have purchased Trump Media & Technology Group stock, including about 200,000 in recent weeks, Nunes told Fox Business earlier this month. He called these small investors “the most amazing aspect of our business.”
These investors have had a wild ride since the stock began trading as DJT on March 26. Shares rose in the first two days of trading but have since lost more than two-thirds of their value.
Such fluctuations have given rise to comparisons with the so-called “meme” actions like GameStop, which typically attracts individual investors based on social media buzz, rather than traditional metrics favored by investors, such as revenue and profit growth.
Last year, Trump Media lost $58 million on $4.1 million in revenue, about half the annual sales made by a single Chick-fil-A location.
—With reporting from the Associated Press.
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