Former President Donald Trump’s personal holdings in Trump Media and Technology Group surpassed $6 billion in March. Public Market DebutAbout six months later, losses and declining revenues had reduced its assets to less than $2 billion.
A months-long slump has seen shares fall more than 70% since a peak in late March, hitting a new low on Wednesday. Trump, as the largest shareholder of Trump Media & Technology, has suffered the biggest loss, but he has not been able to sell his holdings so far, so the declines are only on paper.
Trump owns about 60% of Trump Media & Technology Group, a loss-making social media company that trades under the ticker symbol DJT, the former president’s initials. The company has drawn support from Trump’s supporters, primarily retail investors who flock to Truth Social groups to express concern about falling stock prices and blame short sellers for the plunge.
“Just wondering, why doesn’t Trump Media & Tech Group just suspend their stock (e.g. based on company news) while they investigate all of the manipulation?,” one member of the DJT investor group wrote on Truth Social on Wednesday. “This is going to make the short sellers panic!!!”
Trump Media shares fell $1.10, or 6 percent, to $16.98 on Wednesday, their lowest price since the stock began trading in March. The stock was little changed in trading on Thursday.
But short sellers — investors who bet a stock will fall by borrowing shares and buying them when they fall, then locking in the difference — aren’t to blame for the company’s falling market capitalization, according to Igor Dusaniwski, managing director at financial data firm S3 Partners. For one thing, there are very few shares to short, he said.
“DJT trading volume today is 5.3 million shares, and even if every share available to borrow was sold short today, it would amount to less than 8% of today’s trading volume,” Dusaniwski told CBS MoneyWatch. “DJT’s share price movement over the past few weeks has been primarily driven by buying and selling, not short selling.”
Trump Media did not respond to a request for comment.
There are three reasons why Trump Media’s stock price is falling.
Meme Stock Actions
Analysts have previously noted that Trump Media’s shares tend to move more like so-called meme stocks — companies that are driven more by buzz and social media than by business fundamentals like revenue and profit growth.
For example, after Trump survived an assassination attempt in July, Trump Media’s stock price fell 1.2%. Soared by over 30%Polls at the time also showed him as a favorite to win the November presidential election.
But about a week later, President Joe Biden withdrew from the Democratic nomination and replaced it with Vice President Kamala Harris, who has risen in the polls and is now neck and neck with Trump in key battleground states. According to According to the latest CBS News poll.
Since Biden decided to step down on July 21, Trump Media shares have fallen 51%.
Reduced revenue and losses
Truth Social may have a core following of Trump supporters, but that hasn’t translated into increased profits or revenue yet.
Trump Media last month reported second-quarter revenue of $836,900, down 30% from the same period a year ago. In regulatory filings, the company reported a loss of $16.4 million in the second quarter, narrower than a loss of $22.8 million in the same period a year ago. The company blamed the decline in advertising revenue on changes to revenue sharing with its advertising partners.
Recent advertisers on Truth Social have included companies promoting the anti-parasitic drug ivermectin, which some have cited as a miracle cure for coronavirus and other illnesses, as well as Truth Social’s Parker and MyPillow, a dating site aimed at conservatives.
Expired lockup
Finally, the Trump media is so-called Lock-up clauseThis has restricted President Trump and other people associated with the company from selling shares.
Such lockups are common on Wall Street to prevent big investors from dumping stock soon after a company goes public, as a massive insider sell-off could crash the company’s share price.
The lockup expires on Sept. 19, allowing Trump and other insiders to sell their shares in the company. It’s unclear whether they will actually do so, but the possibility of such a sale could also increase volatility in the stock price.