Zinger Key Points
- Trump has a majority 64.9% stake in TMTG by virtue of the 114.7 million shares he owns in the company.
- Trump and other insiders cannot sell their stake in TMTG until September unless the terms or waived or pulled forward by the board.
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Shares of Donald Trump-promoted media company Trump Media & Technology Group Corp. DJT plummeted nearly 15% on Thursday, underperforming the broader market. In the process, the stock extended the weakness it has been experiencing since the start of June in the current down cycle. Thursday’s slide in TMTG shares dented the net worth of Trump, who is running for a second presidential term.
What Happened: Trump’s net worth at the end of Thursday’s session was at $4.9 billion, Forbes’ estimate showed. This marked a decline of about $523 million or 9.6% from the previous session.
The downside is more concerning because the trading volume for the day was significantly above average. On Thursday, 13.85 million shares exchanged hands compared to the average three-month volume of 7.62 million.
The sharp drop came after the company announced late Tuesday that the U.S. Securities and Exchange Commission (SEC) has declared its shelf registration statement filed in mid-April effective. This allows the company to offer 14.38 million common shares and up to 4,061,251 warrants, potentially raising about $247.1 million from the exercise of the warrants.
Incidentally, Trump and other insiders cannot sell their stake in TMTG until September due to a lockup period unless and unless the board decides to waive or pull forward the timing of the lock-up expiration.
Trump has a majority 64.9% stake in TMTG thanks to the 114.7 million shares he owns in the company, according to filings by the company.
In June so far, TMTG stock fell by $22.34 or 45.5%, eroding Trump’s net worth by $2.56 billion. The recent downtrend began after Trump was pronounced guilty in the New York hush-money criminal case.
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Why It’s Important: TMTG went public by merging with SPAC Digital World Acquisition Corp. on March 26. The stock closed the debut session at $57.99, rising to a post-IPO high of $79.38 in the very same session. TMTG’s public debut swelled Trump’s net worth by $4.1 billion, Forbes reported.
Since then the stock has seen considerable volatility amid developments surrounding Trump’s legal travails and his election prospects. Following a stellar show in the Republican primary elections, the former president is all set to clinch the party’s nomination at the Republican National Convention scheduled for July 15-18.
Aside from Trump’s woes, the company’s fundamentals have not evinced enthusiasm among analysts, with most crying foul over the company’s staggering valuation and dismissing it as unsustainable. The Truth Social platform owned by TMTG has failed to find much traction as it operates in a niche area as opposed to bigger publicly-listed social media rivals.
The average number of monthly visits to the platform for the one year from April 2023 to May 2024 fell 39% relative to the previous one-year period, data from digital intelligence platform Similarweb showed, reported CNBC.
Price Action: TMTG shares ended Thursday’s session down 14.56% at $26.75, while they were up 2.39% in premarket trading on Friday, according to Benzinga Pro data.
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