Trump shares tank after announcing tens of millions of new shares

Trump shares tank after announcing tens of millions of new shares

Shares of Trump Media & Technology Group fell again after the company announced a massive new stock offering. A struggling company quickly loses money, and new stock offerings can help it stay afloat.

But there is a downside to returning to the market with new shares: The public stock offering of 21.5 million shares announced on Monday will add more than 15% of shares to the open shares of Truth Social owners. That would significantly devalue the interests of existing shareholders — including former President Donald Trump.

Shares of TMTG (DJT) fell over 15% on Monday. Shares have surged higher in recent months in anticipation of a merger of the blank check acquisition company with Trump’s media business. But it has lost more than 60% of its value since its peak on March 26, a day after the merger was completed and it began trading publicly as TMTG.

Matthew Tuttle, chief executive of Tuttle Capital Management, said that management would be “foolish” not to issue new shares, even if the move would upset shareholders.

“Anytime you see a stock spike, like you’re seeing this spike, secondary offerings are always risky,” Tuttle said. “I think many investors in this matter do not know that. … You probably have a lot of Trump fans sitting there saying, what the hell?”

However, the stock’s move lower based on this latest update is likely to be temporary, he said.

“This will upset some people. Other people might see it and try to buy it,” Tuttle said. “As long as Trump is in the news in some way, shape or form, this is going to be a meme stock. People are going to trade it.”

Shareholders, including Trump, have seen their holdings dwindle in value since the company went public.

Anyone who bought Trump Media at the closing high of $66.22 on March 27 has now lost more than half of their money. The sharp drop has hurt Trump’s net worth. The former president’s stake was worth $5.2 billion at the closing high for Trump Media’s stock price. As of Monday morning, it had plummeted to about $2.3 billion. Trump’s net worth fell about $400,000 Monday from falling stocks.

Why Trump Media stock is so volatile
There are several reasons behind the interesting stock changes. The company is tied to Trump, a polarizing political figure whose association with the stock has drawn attention. Trump Media’s public debut also marks the former president’s return to Wall Street after years of regulatory and legal obstacles.

Experts have warned retail investors to be careful if they choose to trade the stock, especially since the company has no fundamentals to support its lofty valuation. Trump Media lost $58 million in 2023 and only earned $4.1 million.

Trump now owns more than 57% of the company’s shares. Unless he buys shares in a new public offering, Trump will own less than half of the company’s publicly traded stock after it issues more shares.

But companies need money. It said it had serious doubts about its ability to continue operating. The company generated little revenue, it lost millions of dollars and it also lost many of its users.

While the stock offering is not directly related to Trump’s criminal trial beginning Monday, the company said in a warning to potential investors that Trump’s ongoing legal proceedings pose risks to the company’s reputation and brand.

“President Donald J. Trump is the subject of numerous legal proceedings. An adverse outcome in one or more ongoing legal proceedings could have a negative impact on TMTG,” the company said. “If President Donald J. Trump is no longer able to devote significant time to Truth Social, TMTG’s business will be severely impacted.”

This is a developing story and will be updated.