Trump Media shares tank after filing shows more stock may be sold
Reuters
Published Apr 16, 2024 05:11PM ET
By Echo Wang
(Reuters) -Shares of Donald Trump's social media company slumped 18% on Monday, extending losses since the stock's debut last month, after the company said it could sell millions of shares in coming months, including the former president's entire stake.
Trading in Trump Media & Technology Group, which operates Truth Social, has been volatile since its listing on March 26, attracting both loyal Trump fans and short sellers who see the stock as wildly overvalued.
The stock already has fallen nearly 60% since it opened on its first day of trade at $70.90, after a blank-check merger with Digital World Acquisition Corp. The shares closed down 18.4% at $26.61.
Monday's filing, known as a registration statement, is considered standard after a company goes public through a special purpose acquisition company, or SPAC. These "blank check" entities raise capital through an initial public offering to acquire or merge with a company that is not publicly traded.
In the vast majority of these mergers, the company is contractually required to file a resale statement for parties who may not be able to sell their shares freely without the registration, said Peter Byrne, a securities lawyer at Cooley LLP who specializes in the process of going public.
"It's completely standard," Byrne said.
Bankers and lawyers told Reuters while the filing does not indicate any imminent intention to sell from affiliates of the company, it does clear the way for Trump to sell his shares after the lock-up is expired or waived.
The filing showed a potential sale of 146.1 million shares, including Trump's stake of 114.8 million shares, divided between the 78.75 million he owns and an additional stake he could receive if certain performance-based measures are achieved.
The filing also listed an additional 21.5 million shares that could be sold upon the exercise of certain warrants issued when the company went public.
Trump, the Republican candidate for president in the November election, is on trial in a Manhattan court related to hush money payments to a porn star. He has pleaded not guilty.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.