Trump Media & Technology Group’s stock is tumbling again after the company announced a potentially massive new influx of shares.
This filing seeks to register all shares related to the merger that took Trump Media public, including those that are tied to warrants.
The stock had rocketed higher in recent months in anticipation of merging a blank-check acquisition company with Trump’s media business.
People are going to trade it.” Shareholders, including Trump, have already seen their holdings dwindle in value since the company went public.
Anyone who bought Trump Media at the closing high of $66.22 on March 27 has now lost more than half of their money.
The former president’s stake was valued at $5.2 billion at the closing high for Trump Media’s stock price.
Why Trump Media stock is so volatile There are a number of reasons behind the stock’s eye-popping swings.
Trump Media lost $58 million in 2023 and made just $4.1 million in revenue.
Following the announcement of a potentially enormous new share inflow, Trump Media and Technology Group’s stock is plummeting once more. A fresh offering of stock could save the financially troubled company, which is losing money quickly.
But there’s a catch to returning to the market with more shares: the Truth Social owner’s publicly traded shares would have more than 15% more stock after the announcement on Monday that 21.5 million shares would be made available for purchase. This would significantly reduce the value of the stakes held by current shareholders, including former President Donald Trump. Additionally, it implies that millions of shares might be liquidated.
With this application, all shares—including those subject to warrants—connected to the merger that made Trump Media public are to be registered. The ability to purchase stock in a company at a predetermined price is granted by a warrant.
Vice president of research at Morningstar John Rekenthaler stated, “The belief is that they’re going to exchange the warrant for a share of stock and then immediately sell that stock.”.
The CEO of Tuttle Capital Management, Matthew Tuttle, claims that even though the decision will anger shareholders, it would be “stupid” for management to refrain from selling more stock.
On Monday, TMTG (DJT) shares closed more than 18% lower. A blank-check acquisition company was expected to be combined with Trump’s media company, which sent the stock skyrocketing in recent months. Yet since its peak on March 26, the day the merger was finalized and it began trading publicly as TMTG, it has lost more than 60% of its value.
According to Tuttle, the stock’s decline prompted by this most recent information will probably only last moment.
Some people are going to get upset over this. He said, “It might catch someone’s eye and make them want to buy the dip.”. This stock will become popular as long as Trump is making headlines in any capacity. It will be traded by individuals. “.
Trump is among the shareholders who have already seen a decline in the value of their holdings since the company went public.
More than half of investors who purchased Trump Media on March 27 at the closing high of $66.22 have since lost money. The steep declines have put a dent in Trump’s net worth. At the closing high of Trump Media’s stock price, the former president’s stake was valued at $5,02 billion. It fell to roughly $2.11 billion by Monday’s close. Due to the stock market’s sharp decline on Monday, Trump’s net worth decreased by about $470 million.
As part of this filing, more than 146 million shares that some investors own are being registered for potential resale. These shares include all 114,08 million of Trump’s 78,08 million existing shares as well as 36 million shares that could be awarded if the stock price stays above a specific threshold.
Although they won’t be able to sell those shares right away, this move means they’re one step closer to being able to once the rest of the prohibitions are cleared including a six-month lock up period, says Michael Ohlrogge, associate professor at NYU School of Law.
why the stock of Trump Media is so erratic.
The stock’s striking fluctuations can be attributed to several factors. The business has ties to Trump, a divisive politician whose connection to the stock has drawn attention. Following years of legal and regulatory obstacles, the former president made his comeback to Wall Street with the public launch of Trump Media.
Because the company doesn’t have the fundamentals to support its absurdly high valuation, experts have cautioned retail investors against trading the stock. Only $4.1 million was earned by Trump Media in 2023, a $58 million loss.
At present, Trump holds over 57% of the company’s shares. After the company issues additional shares, Trump would own slightly less than half of its publicly traded stock, unless he bought stock in the new IPO.
But the business requires funding. It has expressed grave concerns about its capacity to carry on doing business. The company loses millions of dollars, makes little money, and loses a lot of users in the process.
Even though the share offering had nothing to do with Trump’s upcoming criminal trial, which starts on Monday, the company warned prospective investors that the company’s reputation and brand are at risk due to Trump’s ongoing legal proceedings.
The President, Donald J. Several legal actions are being taken against Trump. A bad result in any of the current legal actions could have a detrimental effect on TMTG, the business stated. “If Vice President Donald J. If Trump were to stop spending a significant amount of time on Truth Social, TMTG’s operations would suffer. “.
Context and new developments have been added to this story. It also makes up for the Monday decline in Trump’s net worth.
