By C. Perera, JadeTimes News
Trump Media & Technology Group Experiences Sharp Decline
Trump Media & Technology Group, the parent company of Truth Social, has seen a significant drop in its market value, losing approximately half since May 30. This date coincides with former President Donald Trump being convicted of 34 felony counts in a hush money case. The company's volatile stock price fell another 5% on Friday, resulting in a total decline of 50% over three weeks.
This dramatic selloff has slashed nearly $3 billion from Trump's estimated net worth. The downturn intensified after Trump Media announced regulatory approval for a move that could dilute existing shareholder holdings.
Despite the declining share price, analysts warn that Trump Media might face further losses. Jay Ritter, a finance professor at the University of Florida, noted that the stock remains significantly overvalued. Trump Media's market value still stands in the billions, despite generating minimal revenue just $770,500 in the first quarter, marking the second consecutive quarter of sub $1 million revenue. Truth Social continues to lag behind larger social media platforms like Elon Musk’s X , Reddit, and Instagram’s Threads.
Matthew Kennedy, a senior IPO market strategist at Renaissance Capital, described Trump Media as a development stage company with a multi billion dollar valuation, akin to meme stocks such as GameStop and AMC, which trade more on momentum than fundamentals. He noted that significant stock drops usually attract value investors, but this is not typical for meme stocks.
Trump Media's June worsened when the Securities and Exchange Commission approved its registration statement, allowing early investors to exercise warrants and purchase more shares. This could raise nearly $250 million for the company, funds which could be used to develop an ad platform or acquire smaller firms. CEO Devin Nunes highlighted the potential for growth in TV streaming and other platform enhancements.
However, the exercise of warrants will likely dilute existing shareholder's holdings by increasing the supply of outstanding shares by 21.5 million. Ritter emphasized that the price of meme stocks is heavily influenced by supply and demand dynamics.
Trump, the company's primary shareholder with a 65% stake amounting to 114.75 million shares, saw his holdings increase in late April through a bonus triggered by the company’s stock performance. His stake, which cannot be sold in the near term, is now valued at about $3.1 billion, down from $6 billion on May 30.