This photo illustration shows an image of former President Donald Trump reflected on a mobile phone screen showing the Truth Social app on February 21, 2022 in Washington, DC.
Stephanie Reynolds | AFP | Getty Images
The stock price is Trump Media Shares closed down more than 18% on Monday after the company disclosed plans to allow existing investors to exercise warrants.
DJT shares closed at $26.61. Shares of Trump Media, which created the Truth Social app and trades on Nasdaq, fell nearly 20% last week.
The company’s stock price plunge came as Donald Trump sat in a Manhattan courtroom to begin his criminal trial on hush-money-related charges. Trump is the company’s major shareholder.
Since public trading began on March 26, Trump Media’s stock price has fallen more than 62%, from its opening price of $70.90 that day to about $27 on Monday.
As a result, its market value has been reduced by nearly $6 billion, to about $3.7 billion as of Monday.
The company’s intention to issue more common shares was disclosed in a preliminary prospectus submit and the Securities and Exchange Commission.
No shares may be offered prior to the effectiveness of a registration statement with the SEC.
The filing describes a plan to issue more than 21.4 million shares of common stock that are issuable “upon the exercise of warrants,” according to the filing. Warrants give their holders the ability to purchase shares at a predetermined price within a certain time frame.
Trump Media predicted in the filing that it would “receive an aggregate of approximately $247.1 million through the exercise of warrants.”
As of Friday, the closing price of Trump Media Warrants was $13.69, according to the filing. The warrants are trading on Nasdaq under the ticker symbol “DJTWW.” The stock fell more than 15% on Monday.
The company also seeks to resell up to 146.1 million shares from “selling security holders,” 114.8 million of which are held by Trump himself. Trump owns 78.8 million shares of the company, and if the stock stays above $17.50 for enough trading days, he will receive 36 million “profit shares.”
Based on Monday morning’s stock price, Trump’s current stake in the company (nearly 60%) is worth more than $2.2 billion. Trump is not allowed to sell his shares until a six-month lockup period expires.
The lockup period was a condition of Trump Media’s long-delayed merger with shell company Digital World Acquisition Corp., which closed on March 25.
Trump, who switched to Truth Social after being suspended from Twitter and Facebook in 2021, has seen his social media following dwindle significantly, but he has been trying to encourage his followers to flock to the fledgling app. It’s unclear whether they have heeded Trump’s call: The company has not publicly released key performance indicators, including the number of active Truth Social users.
However, the company revealed a net loss of $58.2 million in 2023, with revenue of just $4.1 million.
“There is a disconnect between stock valuations and financial health,” said Ben Silverman, director of Verity Research.
But if the stock price stays high enough for the company to issue dividend stock, Trump and other insiders could receive a windfall worth more than $1 billion (at current trading prices).
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