Trump Media & Technology Group (NASDAQ: $DJT), the parent company of Donald Trump’s social media platform Truth Social, has been on a rollercoaster ride since going public in late March. On Monday, the stock sank 18% after the company filed to issue millions of additional shares.
This decline continued the previous week’s downturn, triggered by an SEC filing revealing that the company’s sales amounted to just over $4 million. In comparison, its net losses reached nearly $60 million for the year ending December 31.
Warrant Issuance and Share Resale
According to the latest filing, Trump Media stated that more than 21.49 million shares are issuable upon the exercise of warrants from the merger with the SPAC, Digital World. However, the company faces regulatory hurdles as it awaits the SEC’s approval for the issuance of stock warrants, which enable holders to purchase shares at predetermined prices within specified time frames.
The company is also seeking approval for the resale of approximately 146.1 million shares from “selling securityholders,” which includes former President Donald Trump and ARC Global Investments.
Addressing concerns over potential share sell-offs, Chad Nedohin, a contributor on Truth Social, emphasized, “Trump has NOT indicated any plans to sell his shares.” He clarified that the increase in total shares in the S-1 pertains to warrants, not new unexpected issuances.
Trump Media Auditor Resigns
Despite the filing, Trump remains under a “lockup” deal that restricts him from selling his shares for another roughly five months. His son, Donald Trump Jr., a board director, and CEO Devin Nunes, are also bound by the lockup.
Compounding the company’s woes, its first auditor resigned a mere few months into the role, as reported by the Financial Times. The resignation adds another layer of uncertainty amidst an already turbulent period.
Despite the challenges, Trump Media continues to draw support from a significant base of the former president’s followers. CEO Devin Nunes has praised the support of these investors, and some Truth Social users have expressed their belief that the stock will recover, with one member stating, “I believe time is our friend. Half a year until election. I can definitely hold until then at the minimum.”
DJT Stock Update
On Monday, Trump Media & Technology Group Corp. (DJT) experienced a significant decline and closed at $26.61, marking an 18.35% decrease from the previous closing price of $32.59. The slide continued on Tuesday, with the stock down 13.30% to $23.07 as of 02:16 PM EDT.
This decline followed the announcement of the company’s intention to issue millions of additional shares and marks a significant downturn for DJT, which peaked in late March at $66.22 per share. Since then, the company’s stock has fallen by more than 60%.
The company’s market value is $3.64 billion, significantly lower than its peak valuation of nearly $8 billion, with the average trading volume over the last ten days being 6.99 million shares.
Despite the high risk of shorting the stock, investors are short on 5.87M DJT shares, representing 10.13% of the float and 4.29% of the shares outstanding.
Legal Troubles and Financial Pressure
The turbulence surrounding DJT shares comes amid Trump’s legal woes. Trump is currently on trial in a Manhattan court, facing 34 felony counts of falsifying business records related to hush-money payments to the adult film star Stormy Daniels. Additionally, Trump is under significant financial pressure, owing about $500 million as a result of being found liable in civil fraud, defamation, and sexual abuse cases.
Earlier this month, several Democratic-aligned groups called on Congress to investigate Trump Media amid a flurry of news about the firm’s dubious connections. Two Florida brothers pleaded guilty to insider trading related to the ex-president’s social media company, and the company was kept afloat by loans from a Russian-American businessman under federal investigation.
DJT Stock: Sell Signals Amid Decline
DJT stock is currently signaling sell indications from short and long-term Moving Averages, suggesting a negative outlook. A sell signal was triggered from a pivot top point on April 2, 2024, resulting in a notable decline.
Should You Invest in DJT Stock?
The turbulent performance of Trump Media & Technology Group’s (DJT) stock underscores the company’s ongoing struggles. The planned issuance of millions of additional shares, auditor resignation, and regulatory hurdles have all contributed to the stock’s decline. Despite the steadfast support from the former president’s base, DJT is grappling with significant legal and financial pressures confronting its founder, Donald Trump.
With sell signals, the outlook for DJT stock remains uncertain as the company navigates these obstacles. Investors should keep a close eye on future developments that could impact the company’s path in the months ahead.
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