The stock price of Trump Media, in which former President Donald Trump holds the majority of the equity, has been sold off for a week. On Thursday (June 20), the stock price of the company after another volatile trading day closed down nearly 15%.
(Source: Google)
Conservative social media app Truth Social's creator Trump Media, with code DJT, traded on the NASDAQ with a closing price of $26.75 per share that day.
This price is more than 40% lower than the price of over $49 per share in early June.
As the Dow Jones Industrial Average fell on Thursday, trading volume for Trump Media also surged. The trading volume for that day exceeded 13.2 million shares, more than three times the 30-day average trading volume.
Given that Trump Media's revenue is low, such a large trading volume and price fluctuation of its stock is unusual.
Thursday's decline followed a nearly 10% decline in trading volume on Tuesday, which was more than twice the average trading volume.
After the market closed on Tuesday, Trump Media announced that the US Securities and Exchange Commission (SEC) had declared its registration statement effective. This news caused the company's stock price to plunge more than 17% in after-hours trading. Because the US stock market was closed on Wednesday, this news was fully reflected in Trump Media's stock price after it opened on Thursday.
Analysts pointed out that the approval of Trump Media's registration by the US Securities and Exchange Commission may have been the catalyst for the trading frenzy this week.
This move intensified the decline in Trump Media's stock price since May 30, when a New York jury found the former president guilty of 34 counts of falsifying business records.
The prospectus approved by the US Securities and Exchange Commission allows early investors in the company to resell some of their shares and exercise warrants. These sales may depress the stock price by increasing the total number of shares.
Nevertheless, the company touted this as good news and expects to net up to $247 million if all the warrants are exercised.
The stock's dramatic decline over the past three weeks has also caused huge losses to Trump's net worth, at least on paper. The Republican candidate holds 114,750,000 shares of the company's stock, accounting for about 65% of the total shares.
At the beginning of this month, the value of these shares exceeded $5.6 billion. After Thursday's close, the value of these shares was about $3 billion.
Trump cannot sell his shares until the end of the six-month lock-up period in late September. Lock-up clauses prohibit top investors and insiders from selling their shares immediately after the company goes public.
After a long merger with a special purpose acquisition company, Trump Media began trading publicly at the end of March.
The large fluctuations in Trump Media's stock price during its first few months on the NASDAQ seemed unrelated to any specific news or business event, prompting critics to call it a meme stock.
The company's only product, Truth Social, made its debut in early 2022 and has attracted relatively few users compared to existing social media giants such as X or Facebook. Trump Media reported last month that it had a net loss of nearly $328 million in the first quarter and revenue of about $771,000.