NEW YORK — The stock price of Donald Trump’s social media company fell again on Monday, leaving it almost 60% below its peak at the end of last month.
Trumpmedia & Technology Group fell 16.8% to $27.10 in afternoon trading as more of the euphoria surrounding the stock faded. It’s a sharp decline since approaching $80 after the owner of Truth Social merged with a shell company to have its shares trade on the Nasdaq under the symbol “DJT,” for Trump’s initials.
Some of the decline may be due to criticism that the stock price has moved well beyond what skeptics said the money-losing company is worth, especially if it is one with high chances of success. But another part is likely due to the action Trump Media took on Monday.
The company has filed documents with the U.S. Securities and Exchange Commission that open the door to the future potential sale of millions of shares. The document, called an S-1, covers investor warrants that can be converted into stock, as well as shares held by company insiders.
The filing also includes all of the former president’s shares. However, Trump remains under a “lock-up” agreement that largely prohibits him from selling his shares for about another five months. His son, Donald Trump Jr., who is a director on the board, and CEO Devin Nunes, are also bound by the lockup.
Typically, all shares owned by insiders that are subject to lock-up deals are included in such filings, according to Jay Ritter, an expert on initial public offerings at the University of Florida’s Warrington College of Business.
The filing doesn’t necessarily mean investors plan to sell their shares, said Sarasota, Florida-based Trump Media & Technology Group reported this in a statement.
Trump Media got its place on the Nasdaq after merging with a company called Digital World Acquisition Corp., which was essentially a pile of cash looking for a target to merge with. It is an example of a so-called Special Purpose Acquisition Company (SPAC), which can offer young companies faster and easier routes to have their shares traded publicly.
S-1 filings are typically filed soon after a SPAC deal closes, usually within 15 or 30 days, says Kristi Marvin, founder of SPACInsider.com, which specializes in SPAC deals.
The exercise of warrants referenced in Trump Media’s S-1 filing would increase the number of shares outstanding for the company. That, in turn, could put downward pressure on the share price. When something becomes more available, it tends to drop in price unless demand for it increases accordingly.
The decline in Trump Media’s stock price in recent weeks is hurting shareholders, who experts say are primarily investors with smaller pockets than large institutions. Several Truth Social users have said they bought shares to show their support for the former president.
The decline also directly impacts Trump’s finances. He could personally own nearly 114.8 million shares, depending on the company’s performance. At today’s price, that would be worth $3.15 billion. As of March 27, it was worth almost $7.6 billion.
On Monday, Trump arrived at a New York court for the start of jury selection in his hush money trial. It is the first trial of a former US commander-in-chief.
