Shares of Trump Media & Technology Group — Donald Trump’s namesake social media company — fell Tuesday as shares continued a long slide that began after the former president’s guilty verdict on all 34 counts in his criminal trial for hush money.
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Trump Media, which trades under the symbol “DJT,” has fallen 39% since May 30, when a New York jury found Trump guilty of falsifying business records. On Tuesday, Trump Media closed down 10% at $31.31.
The sale came as Trump Media warned investors that it could not force its majority shareholder to favor Truth Social, the company’s flagship platform, including publishing there first.
Trump Media is proving to be a risky proposition for investors. Volatility has become the hallmark of the title. It swung dramatically from a high of $79.38 per share at the close of March 26 to its lowest closing level of $22.84 on April 16.
Its shrinking $5.5 billion market capitalization relies almost entirely on the Trump brand and his loyal supporters, including small investors who have shown him their support by backing the stock.
The role of Truth Social and the new platforms
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Trump joined TikTok in June, amassing millions of followers. A political action committee supporting Trump’s candidacy — Make America Great Again Inc. — opened a TikTok account in May.
The company said in an amended registration statement:
If TMTG disagrees with President Donald J. Trump on the scope of his obligation to use or post first on Truth Social, TMTG has no meaningful recourse with respect to such disagreement – which could have a material adverse effect on TMTG’s business and/or operations.
Tuesday also marked the deadline for some Truth Media investors to begin selling shares. In a filing with regulators in April, Trump Media said it intended to offer nearly 21.5 million shares of common stock “following the exercise of warrants.”
He must wait for authorization from regulators. Trump’s lockup period ends at the end of September, so he could start selling some of his shares at that time.
Market competition and financial performance
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These developments only add to the uncertainty that has surrounded Trump Media shares since they began trading in March following the merger with shell company Digital World Acquisition Corp.
In competing for ad dollars and eyeballs with big social media companies like Facebook, TikTok and YouTube, Trump Media is far behind. It posted a net loss of $327.6 million in the first quarter on revenue of less than $1 million.
Trump Media officials blamed its woes on stock manipulation by “naked” short sellers. Short sellers don’t actually own the shares, but borrow them and then sell them, betting that the shares will fall so they can buy the shares back at a lower price and keep the difference.
“Naked” short selling involves betting that a stock will fall without borrowing or owning the shares. Such a practice may be illegal.
The impact of legal issues
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Trump Media’s stock price has been heavily influenced by the legal issues surrounding its namesake. Donald Trump’s conviction has cast a shadow over the company, raising concerns among investors about the potential impact on the company’s operations and its future.
The company’s financial health is also in question, with significant losses reported and a difficult path to profitability.
The market’s reaction to Trump Media’s announcements and legal issues indicates a lack of confidence in the company’s ability to overcome these challenges.
The volatility of DJT stock highlights the risks associated with investing in a business so closely tied to the fortune and legal status of a single individual.
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Looking ahead, Trump Media faces several critical obstacles. The potential for further legal challenges, the need to obtain regulatory approval for stock offerings, and competition from established social media platforms all pose significant threats to its stability.
The company’s ability to innovate and attract users to Truth Social will be crucial to its survival and growth.
Investors will be closely watching how the company addresses these challenges. The involvement of high-profile funders and the potential for new social media initiatives could provide some support, but the path forward remains uncertain.
As Trump Media continues to examine these issues, the broader implications for the social media landscape and the role of political figures in business will be closely examined.
Trump Media & Technology Group’s recent stock performance reflects a complex interplay of legal issues, market competition and investor sentiment. The company’s reliance on the Donald Trump brand and the volatility of its stock present significant risks for investors.
As the company seeks to stabilize and grow, it must meet these challenges head-on to build a sustainable future.
This article was translated from English using artificial intelligence tools, then proofread and corrected by a local translator.
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