(Bloomberg) – Trump Media & Technology Group Corp. wiped out about $2.8 billion in value as some of the retail traders who frantically bid up stocks last month began selling.
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The social media company, owned primarily by former President Donald Trump, has fallen 37% since its March 26 close. The stock fell below the level it was trading at on March 22, when investors approved its tie-up with the blank check company. , Digital World Acquisition Corp.
Trump Media, which owns Truth Social, had soared in its early days as a public company after the private company merged with DWAC, the so-called shell company.
But the stock, which trades under Trump’s initials DJT, has struggled to capture the attention of individual investors who bought shares to support the former president in his 2024 re-election campaign.
As the stock fell, the paper windfall for Trump himself fell from some $1.6 billion to about $2.9 billion. For Trump to benefit from paper wealth, he will have to wait six months before he can sell shares under a lock-up agreement.
Read more: Trump sues Truth Social Company co-founders to eliminate them
Trump Media has a market cap of nearly $5 billion, even after the latest drop, despite revenue of just $4.1 million last year. That increased valuation has made it costly and risky to bet against the company, with short sellers facing annual financing costs of more than 450% to borrow the shares, according to brokerages.
Read more: Trump Media is now the most expensive US stock to bet against
The fallout has shades of past meme stocks like GameStop Corp. and other so-called de-SPACs, companies that went public through blank check deals, which saw their stock performance initially fluctuate before falling.
More than a fifth of the nearly 500 SPAC deals completed since 2019 are trading below $1 each, representing a drop of more than 90%. And dozens of them have at times seen their stock prices soar in a frenzy fueled by retail traders, meaning the losses for some are far greater.
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