Trump Media & Technology Group’s (TMTG) stock continues its dramatic decline, dropping more than 15% today—the sharp fall follows the announcement of 21.5 million new shares to be issued; the plan would threaten dilution for the current investors of Truth Social, and the market’s reaction seems less-than-enthusiastic.
Trump Media, the parent company of Truth Social, has seen its market value slashed by more than 60% since its public debut on March 26. With a large percentage of ownership, these volatile fluctuations significantly impact Trump’s personal financial position; the valuation of his stake has plummeted from a peak of $5.2 billion to approximately $2.3 billion today.
In addition to the issuance of new shares, Trump Media is looking to resell a large quantity of stock on behalf of current owners who are referred to as “selling security holders” in the filings; the potential sale includes 146.1 million shares, 114.8 million of them held directly by Trump.
Matthew Tuttle, chief executive of Tuttle Capital Management, highlighted the precariousness of the company’s strategy, remarking, “The addition of substantial shares for sale could indeed keep the company afloat, but it’s a desperate measure that will upset shareholders”.
The company’s financial troubles are compounded by its weak performance metrics, having reported a staggering $58.2 million loss against a mere $4.1 million in revenue in 2023. Ben Silverman, head of Verity Research, noted, “The stock valuation is detached from the reality of the financials. It’s trading on name recognition rather than solid business fundamentals” .
Moreover, Trump Media’s connection to Trump has made the stock even more volatile, turning it into a so-called meme stock influenced by news cycles rather than traditional market fundamentals. As the former president faces numerous legal proceedings, the uncertainty surrounding his ability to dedicate time to Truth Social threatens the company’s viability.
Michael Ohlrogge, associate professor at NYU School of Law, pointed out, “This stock offering isn’t just about raising funds; it’s about survival. The market’s reaction reflects deep investor concerns about the company’s future as much as its present challenges” .
Despite the turbulence, Trump has urged his substantial social media following to adopt Truth Social, although the effectiveness of this strategy hasn’t shown out in the balance sheet. Unfortunately for Trump and Truth, it seems Elon Musk was first to market with a social media company for conservative rhetoric; now that they have found their home, a potential migration of customers is difficult to imagine given the large disparity in platform quality.
