Shares of Trump Media & Technology Group Corp, the parent company of Truth Social, plummeted on Monday after the company took steps to register shares and warrants, allowing insiders, including former President Donald Trump, to potentially capitalize on their holdings sooner than expected.
The stock dropped 15% to $27.83 in New York trading, hitting its lowest level since January. Warrants linked to the stock also fell 6.9% to $12.75. Trump Media’s market value has been slashed by over $5 billion since its peak in March.
This decline has significantly reduced the potential windfall for Trump, from over $5 billion to $2.3 billion. However, if the stock maintains a level above $17.50, insiders could receive an additional 40 million shares, valued at $1.2 billion.
The company filed to register up to 146 million common shares and 21 million shares issuable upon warrant exercise, along with 4 million warrants to purchase common stock. These securities are held by or underlie holdings of existing Trump Media shareholders.
The registration of shares for resale is a standard procedure for blank-check deals like Trump Media’s. It does not necessarily indicate immediate or future sales.
To proceed, the US Securities and Exchange Commission must review the filing, after which insiders could potentially begin selling stock with board approval. Currently, insiders are restricted from selling shares until September.
Trump Media has attracted individual investors supportive of Trump’s 2024 re-election bid. While the stock initially surged 270% at its debut, it has since dropped over 60%.
Trump is facing legal challenges, including a lawsuit from two Trump Media co-founders alleging he attempted to dilute their stakes and imposed a six-month lockup on their shares. This lockup, they argue, will harm their finances. Trump faces similar restrictions.
In addition to legal battles, Trump is commencing his first criminal trial in Manhattan, accused of falsifying business records related to a pre-election payment to a porn star in 2016, among other criminal prosecutions.
