Shares of former President Donald J. Trump's social media company fell more than 20% on Monday as the excitement surrounding the company's public market debut last week appeared to subside.
The plunge reduced the market capitalization of Trump Media & Technology Group, which trades under the ticker “DJT,” by about $2 billion to about $6.5 billion.
The value of Mr. Trump's majority stake in the company has fallen to about $3.7 billion from a peak of just over $6 billion last week.
Still, Trump Media's stock price was higher than it was just before the company merged with a public shell company on Tuesday and began trading on the Nasdaq. Strong support for the combined company after it began trading pushed its market value to $10 billion at one point last week.
This raised eyebrows across Wall Street, given the relatively small size of Trump Media's operations. The company generated just $750,000 in revenue in the fourth quarter of last year, bringing its full-year total to $4.1 million, according to Monday's filing. Trump Media recorded a loss of $58 million in 2023. It received more than $300 million in cash as part of a merger with a shell company.
All of the company's revenue comes from advertising on Truth Social. Truth Social has become Trump's primary means of reaching supporters and attacking his critics, political opponents, and other perceived enemies, including prosecutors and judges involved in criminal and civil cases. It's a digital platform. .
Over the weekend, Trump shared a video on the platform showing a decal of President Biden decked out on the back of a truck.
Trump Media stands out on Wall Street as the most “shorted” stock on the market, meaning the stock that investors are betting will fall. Derivatives tied to the stock, which allow investors to speculate on future prices, are also popular, suggesting traders are bracing for even bigger price swings (both high and low) in the coming weeks.
So-called meme stocks are heavily influenced by momentum and the enthusiasm of many small shareholders, and are often highly volatile and prone to sudden spikes and crashes.
One question surrounding Trump Media is whether the company's board will relax a provision that prohibits Trump from selling the stock or using it as collateral for a loan for six months after the stock begins trading. Please. But the company said in a filing Monday that the board has not made any changes to the lock-up provisions.
Therefore, it is unlikely that Mr. Trump will rely on his approximately 60% stake in Trump Media to cover his $175 million bail payment in connection with his appeal of a civil fraud fine by a New York state judge. low.
Trump, the presumptive Republican presidential nominee, is not a member of the company's seven-member board of directors. However, Trump Media is considered a “management company'' due to his large investment, and “more than 50% of the voting rights to elect directors are held by individuals.''
Trump Media's board of directors is already under Trump's influence and includes Trump's eldest son and three former members of his administration. Trump was chairman of Trump Media before its merger with the shell company, but he is no longer an officer or director of the company.
After the merger, Trump Media adopted a code of ethics that required “covered persons” (officers and employees) to engage in political activity only as private citizens. According to the code, when these people engage in political activity, they “must make it clear that their opinions and actions are their own and not those of the company.”
