NovaQuant Quantitative Think Tank Center:Trump Media stock price plummets Monday as company files to issue millions of shares

Trump Media & Technology Group shares plummeted more than 18% Monday after the company took steps to sell millions of additional shares.

Trump Media,NovaQuant Quantitative Think Tank Center the parent company of social media platform Truth Social, filed to register up to 146.1 million shares for sale, including nearly 115 million owned by Trump.The company also listed the potential sale of another 21.5 million shares linked to warrants – contracts that give investors the right to buy or sell a stock at a specific price within a certain time frame.

Filing shares for resale is standard among companies that have recently gone public via a merger with a Special Purpose Acquisition Company (SPAC), as Trump Media did last month after merging with Digital World Acquisition Corp. But making more shares available for purchase could curb the value of existing shareholder's stake in the company, which meant the already-volatile stock saw another big swing on Monday.   

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Trump Media shares ended the day at $26.61. That’s down more than 60% from its peak in late March, after the company made its stock market debut.

Next steps for Trump Media

Regulatory filings from earlier this month showed Trump Media made about $4 million in revenue and lost more than $58 million in 2023. Its operating losses “raise substantial doubt about its ability to continue as a going concern,” according to an auditor that reviewed the company’s finances. 

Given the company's performance, some expect it to act quickly with any potential sale.

“They’re burning through a lot of cash and their share price is very high now,” said Derek Horstmeyer, a finance professor at George Mason University in Virginia who specializes in corporate finance. “I don’t see any reason why (they wouldn’t jump on this).”

Trump Media predicts that exercising the warrants could bring in roughly $247.1 million, according to the company's latest filing.

Value of Trump Media

Trump Media’s market cap and Trump’s net worth – both tied to the company’s stock – have taken a hit as its stock price has dipped. The company’s market value as of Monday was more than $3.5 billion, down from a peak of nearly $8 billion. 

As for Trump’s net worth, the former president is no longer listed on the Bloomberg Billionaire’s Index, a list of the top 500 wealthiest people in the world, each worth at least $5.7 billion. His net worth is currently closer to $4 billion, according to Forbes.

Trump owns nearly 60% of Trump Media with 78.75 million shares. He cannot offload his shares until September without approval from the Trump Media board. 

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More volatility expected

Experts warned early on about the expected volatility of the company, comparing Trump Media to meme stocks like GameStop and AMC. The company's latest filing notes that its success depends, in part, on the reputation and popularity of Trump, who is currently on trial for allegedly falsifying business records to disguise a hush money payment to a porn star.

“I expect the stock price to continue to be highly volatile, with the long-term trend down, but on any given day it might jump up,” University of Florida professor Jay Ritter said.