The stock price of Trump Media Technology Group (Donald Trump's eponymous social media company) plummeted on Tuesday, June 18, due to its continuous long-term decline following the former president's conviction on all 34 counts of criminal hush money payments. #2024 Macro Outlook#
The stock symbol for Trump Media is DJT. Since a New York jury found Trump guilty of falsifying business records on May 30, the company's stock price has fallen 39%.
On Tuesday, Trump Media closed down 10% at $31.31. At the time of the sell-off, Trump Media warned investors that it cannot compel its major shareholders to support its flagship platform, Truth Social, including to post first on that platform.
It has proven to be a very risky bet for investors. Volatility has become the hallmark of Trump Media's stock. It fluctuated widely from a high of $79.38 per share at the close of March 26 to a low of $22.84 per share at the close of April 16.
The company's market cap has shrunk to $5.5 billion, almost entirely depending on the Trump brand and its loyal followers, including small investors who support Trump by propping up the stock price.
Trump joined TikTok in June and accumulated millions of followers. The political action committee "Make America Great Again" supporting Trump's candidacy launched a TikTok account in May.
The company stated in its revised registration statement, "To the extent that there are disagreements between TMTG and President Donald J. Trump regarding the scope of his obligations to use Truth Social or to post first on Truth Social, TMTG will not be able to take any meaningful remedial action with respect to such disagreements, which could have a material adverse effect on TMTG's business and/or operation."
Tuesday was also the deadline for some Truth Social investors to start selling their shares. In documents submitted to regulators in April, Trump Media said it planned to sell nearly 21.5 million common shares 'upon exercise of warrants.' The company must wait for regulatory approval. Trump's lockup period is set to expire at the end of September, when he can begin selling some of his shares.
These developments only add to the uncertainty that has plagued Trump Media's stock since it began trading in March following its merger with blank-check company Digital World Acquisition Corp.
Trump Media is far behind in the competition for ad revenue and attention with well-known social media companies such as Facebook, TikTok, and YouTube. The company reported a net loss of $327.6 million in the first quarter and revenue of less than $1 million.
Trump Media officials blamed short sellers for manipulating the stock. The short sellers do not actually own the stock, but borrow it and sell it, betting that the stock price will fall so they can buy it back at a lower price and profit from the difference. Naked short selling refers to betting that the stock price will fall without borrowing or owning the stock, a practice that may be illegal.
Trump Media Technology Group said on Tuesday that the U.S. Securities and Exchange Commission had declared effective its application to resell part of its stock and warrants, which could bring in about $247 million in proceeds.
The company said that with its warrants now exercisable, it expects to be "well positioned" to expand other enhanced features of its TV streaming and platform and potential mergers.
The stock price of the company that owns Donald Trump's social media platform Truth Social fell about 14% in after-hours trading due to potential stock dilution.
Trump Media said the potential proceeds from the sale of these warrants would supplement its over $200 million in unrestricted cash.
The company added that $40 million in restricted cash on its balance sheet will become unrestricted now that the registration statement on Form S-1 has become effective.