Wed. May 29th, 2024

Trump Media Group (DJT) Are the Shares Headed to Zero?

Tyler Mitchell By Tyler Mitchell May25,2024 #finance

DJT plunged 18.35 percent today and is down a bit more after hours. What’s going on?

Image courtesy of StockCharts.com

Trump Stock Tanks After Announcing Massive Share Sale

CNN explains Trump Stock Tanks After Announcing Massive Share Sale

Trump Media & Technology Group’s stock is tumbling again after the company announced a potentially massive new influx of shares. The struggling company is rapidly losing money, and a new stock offering could help it stay afloat.

But there’s a downside to going back to the market with more shares: The addition of 21.5 million shares for sale announced Monday would add more than 15% more stock to the publicly available shares of the Truth Social owner.

This filing seeks to register all shares related to the merger that took Trump Media public, including those that are tied to warrants. Warrants give the holder the right to buy shares of a company’s stock at a set price.

This filing also seeks to register more than 146 million shares held by some stockholders for resale — including all 114.8 million of Trump’s 78.8 million current and 36 million potential shares that could be granted if the stock price holds above a certain level.

The warrants give the shareholder the right but not the obligation to buy shares at a specified price.

The belief is that they’re going to exchange the warrant for a share of stock and then immediately sell that stock,” said John Rekenthaler, vice president of research at Morningstar.

Trump filed to sell all of his shares, which he may do to raise money. He cannot sell those shares now because he is under a 5-month lockup period.

At the stock’s closing peak, Trump’s 57 percent stake was worth about $6.25 billion. Trump’s stake is now worth about $2 billion. But that’s a big mirage because he could never unload a hundred million shares at that price.

The Mission

Variety.Com describes the corporate mission.

TMTG says its mission is “to end Big Tech’s assault on free speech by opening up the Internet and giving people their voices back. TMTG operates Truth Social, a social media platform established as a safe harbor for free expression amid increasingly harsh censorship by Big Tech corporations.” Shares of the company began trading March 26 on the Nasdaq exchange under the ticker symbol “DJT.”

Trump formed TMTG in 2021. That was after the former president had been kicked off Twitter (now called X), Facebook, Instagram, YouTube and other internet platforms, which said he had violated prohibitions against inciting violence in connection with the Jan. 6, 2021, attack on the U.S. Capitol, which aimed to overturn the results of the 2020 election. Trump’s accounts have been reinstated by X, Meta’s Facebook and Instagram, YouTube and others, but he continues to use Truth Social as his preferred social media platform. Truth Social launched in early 2022; TMTG has not disclosed how many people use the service.

That sounds lovely but CBS News reports that “last year, Trump Media lost $58 million on revenue of $4.1 million, about half the annual sales booked by a single Chick-fil-A location.”

How Trump Media is supposed to make a profit is a mystery. The corporation will not disclose the number of users. That’s a warning sign in and of itself.

The Technical Picture

DJT has no open gaps above. So there is no technical reason other than “oversold” for any kind of bounce.

Typically there is some kind of bounce when up gaps fill, but there was no bounce today nor was there a bounce in March when a gap filled.

There is a gap up at roughly 17.50 that’s waiting to fill and another tiny gap at 12.50.

Number of Users

Variety said TMTG does not disclose user but Search Logistics has some Truth Social estimates.

  • Truth Social: 2 Million
  • Twitter: 450 Million
  • Facebook (Meta): 2.91 Billion

The Trump name may find buyers in the stock market but making money will be tough. Twitter is struggling to make money with 450 million users.

Tyler Mitchell

By Tyler Mitchell

Tyler is a renowned journalist with years of experience covering a wide range of topics including politics, entertainment, and technology. His insightful analysis and compelling storytelling have made him a trusted source for breaking news and expert commentary.

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2 thoughts on “Trump Media Group (DJT) Are the Shares Headed to Zero?”
  1. It seems like Trump Media & Technology Group is struggling to keep afloat with these massive share sales. The company’s stock tumbling further due to the new influx of shares could be a risky move. Investors might hesitate to buy into this volatility.

  2. Why is Trump Media Group’s stock tumbling after announcing the share sale? Can this new influx of shares really help the struggling company stay afloat?

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