Donald Trump's Social Media Company Faces 12% Stock Slump as Potential Share Sell-off Looms

By John Lopez

Apr 15, 2024 05:26 PM EDT

Donald Trump's social media venture, Trump Media, faced a significant setback on Monday as its stock price plunged by 12%. This decline follows a regulatory filing revealing the potential sale of millions of additional shares, raising concerns among investors about an impending sell-off.

Jury Selection Begins In Former President Donald Trump's New York Hush Money Trial — NEW YORK, NEW YORK - APRIL 15: Former U.S. President Donald Trump returns to the courtroom after a break during the start of jury selection for his trial at Manhattan Criminal Court on April 15, 2024 in New York City. Former President Donald Trump faces 34 felony counts of falsifying business records in the first of his criminal cases to go to trial.
(Photo : Photo by Jeenah Moon-Pool/Getty Images)

Trump Media Valuation Continues Decline

Shares of Trump Media & Technology Group have experienced a turbulent journey since its market debut on March 26, witnessing a staggering 60% drop from its opening price of $70.90.

The stock slump on Monday added to the company's woes, erasing substantial market value. The company's value dropped by more than $3 billion, with Mr. Trump's majority stake now worth over $3 billion.

Trump Media Readies Sale of Millions of Additional Shares

The regulatory filing unveiled plans to sell 146.1 million additional shares in Trump Media & Technology Group, with former President Donald Trump himself owning 114.8 million of those shares.

Additionally, the filing disclosed an extra 21.5 million shares that could be sold by exercising certain warrants issued during the company's initial public offering. As per The New York Times, the filing also included an "earnout" bonus for Mr. Trump, entitling him to an additional 36 million shares based on the company's stock price.

Trump's Ongoing Legal Battles

The financial challenges facing Trump Media & Technology Group are compounded by ongoing legal battles involving Donald Trump. The former president is currently embroiled in a criminal trial in a Manhattan court, facing 34 felony counts related to falsifying business records.

These legal woes add to Trump's existing financial pressures, including approximately $500 million in liabilities resulting from civil fraud, defamation, and sexual abuse cases.

Trump Media was initially viewed as a potential source of income to alleviate these debts, but its recent performance raises questions about its viability.

Waning Investor Confidence

Investor confidence in Trump Media & Technology Group has been waning, as evidenced by the heightened short-selling activity surrounding the company's stock.

Fund managers such as Marshall Wace and Zazove Associates have been actively shorting the stock, anticipating a decline in its price following the filing of additional share registrations.

Trump Media's financial performance has also been scrutinized, with reports indicating significant losses. Last year, the company recorded a loss of $58 million on revenue of $4.1 million, primarily derived from advertising on its social media platform, Truth Social.