DJT stock plummets again: What’s behind today’s Trump Media decline

DJT stock plummets again: What’s behind today’s Trump Media decline

Trump Media and Technology Group dived again Thursday after regulators approved its registration statement, clearing the way for investors to exercise warrants and for the company to issue additional shares, making millions more available for trading.

Warrants, which reward investors by allowing them to exchange their shares for company stock, can dilute the value of shares held by common shareholders. Typically, some of the investors who exercise warrants will sell the shares, putting pressure on the stock.

The social media company behind Trump’s go-to social media platform, Truth Social, fell 13% to $27 in Thursday trading.

The former president and Republican candidate has lost billions of dollars in paper money since the beginning of June. As Trump Media’s largest shareholder, he owns nearly 115 million shares worth about $3 billion, up from more than $5 billion. Trump and other insiders are not allowed to sell shares until September unless the board waives that restriction or extends the lock-up period.

DJT stock plummets again: What’s behind today’s Trump Media decline

Supporters of former President and Republican presidential candidate Donald Trump applaud as he arrives to speak at a campaign event in Racine, Wisconsin, June 18, 2024.

Stocks long slide started following the former president guilty verdict on 34 counts in his hush money criminal trial. Trump Media, which trades under the symbol “DJT,” has fallen 48% since May 30, when a New York jury found Trump guilty of falsifying business records.

Trump Media welcomed the news that its registration statement has been declared effective. The warrants could add as much as $247 million to Trump Media’s balance sheet.

“We hope to be well-positioned to aggressively pursue TV streaming, other platform enhancements and potential mergers and acquisitions,” Devin Nunes, CEO of Trump Media, said in a statement.

Nunes wrote letters to Congress and other regulators demanding an investigation into “naked” short selling, an illegal form of short selling for which he blamed the volatility of the company’s stock.

Short sellers don’t actually own the shares, but borrow them and then sell them, betting that the shares will fall so they can buy the shares back at a lower price and keep the difference. “Naked” short selling involves betting that a stock will fall without borrowing or owning the shares.

Trump Media has been volatile since its IPO earlier this year, climbing as high as $79.38 after its debut before falling as low as $22.55.

Its market capitalization, which has fallen below $5 billion, relies almost entirely on the Trump brand and his loyal supporters, including small investors who have shown him their support by backing the stock.

These developments only add to the uncertainty that has surrounded Trump Media shares since they began trading in March following the merger with shell company Digital World Acquisition Corp.

In competing for ad dollars and eyeballs with big social media companies like Facebook, TikTok and YouTube, Trump Media is far behind. It posted a net loss of $327.6 million in the first quarter on revenue of less than $1 million.

This article was originally published on USA TODAY: DJT stock in free fall? Trump Media is diving again. Here’s why.

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