Following regulators’ approval of its registration statement, which allowed investors to exercise warrants and the business to issue additional shares, increasing the number of shares available for trading, Trump Media & Technology Group saw another decline in value on Thursday. Warrants can reduce the value of common shareholders’ shares by rewarding investors by allowing them to exchange their holdings for corporate shares. When warrants are exercised, some investors typically sell their shares, which puts pressure on the stock. The social media firm that powers Trump’s preferred social media network, Truth Social, saw a 15% decline and closed at $26.75 on Thursday, nearing its all-time low of $22.55.
Since the start of June, the Republican contender and former president has lost billions of dollars in paper riches. Having once owned more than $5 billion worth of shares, he now owns about 115 million shares, making him the largest stakeholder in Trump Media. Unless the board lifts this limitation or shortens the lock-up period, Trump and other insiders are not allowed to sell stock until September. On June 18, 2024, former President Donald Trump will run for reelection in Racine, Wisconsin. After the former president was found guilty on all 34 felony counts in his criminal hush money trial, the stock market saw a protracted decline. Trump Media, which is traded on the vanity ticker “DJT,” has experienced a 48% decline after a New York jury found him guilty of fabricating financial documents on May 30.
DJT CEO Boosts Shares of Trump Media
The announcement that Trump Media’s registration statement is now official was welcomed. The warrants might increase the balance of Trump Media by $247 million. Devin Nunes, the CEO of Trump Media, stated in a statement, “We’re expecting to be well positioned to aggressively pursue TV streaming, other enhancements to the platform, and potential mergers and acquisitions.” Some refer to Trump’s dissemination of QAnon throughout his campaign as “playing with fire.” Nunes, who has blamed the volatility in the company’s shares for “naked” short selling—an unlawful form of short selling—has written letters to Congress and other regulators requesting a probe into the practice. Instead of truly owning the shares, short sellers borrow them, sell them, and hope that the stock will decline in value, allowing them to repurchase the shares at a reduced cost and pocket the difference. “Naked” short selling is placing a wager on a stock’s decline without taking out a loan or acquiring any shares.
The volatility of Trump media stocks rises
Since going public earlier this year, Trump Media has had significant volatility, rising as high as $79.38 upon its debut and falling as low as $22.55. Its market capitalization, which has fallen below $5 billion, is mostly dependent on the strength of the Trump brand and his devoted fan base, which includes small investors who have supported the company by buying shares. Following the merger with shell company Digital World Acquisition Corp. in March, the Trump Media stock has been trading with a great deal of uncertainty, which is only increased by these developments. Trump Media is far behind major social media players like Facebook, TikTok, and YouTube in the race for advertising revenue and user attention. With less than $1 million in revenue, it declared a $327.6 million net loss for the first quarter.
Early investors in the company are permitted to resell certain shares and execute stock warrants under the terms of the prospectus that was approved by the SEC
Despite this, the corporation celebrated the achievement and predicted that if all of the warrants are exercised for cash, it may make up to $247 million. At least on paper, Trump’s net worth has dropped significantly as a result of the stock market’s decline during the past three weeks. Approximately 65% of the company’s shares, or 114,750,000, are owned by the presumed Republican nominee. At the start of the month, the shares were valued at almost $5.6 billion. Approximately $3 billion was the value of those identical shares as of Thursday’s close. Trump’s shares are locked up for six months, and he can’t sell them until late September.
Top investors and insiders are prohibited from selling their shares as soon as a business goes public by lockup agreements. In late March, after a protracted merger with a special purpose acquisition firm, Trump Media began trading openly. Due to DJT’s stock erratic price fluctuations in its early months on the Nasdaq, which didn’t seem to be connected to any particular business or news event, the company was dubbed a meme stock by some. Truth Social, the company’s only offering, made its debut in early 2022 and hasn’t attracted many users away from established social media behemoths like Facebook or X. With revenues of over $771,000., Trump Media announced last month that it had a first-quarter net loss of almost $328 million.