Trump Media & Technology Group (TMTG), owned by former U.S. President Donald Trump, is facing a significant downturn in its stock value. The company’s shares have reached new lows, marking six consecutive days of losses following the end of restrictions on insider selling. As of September 23, 2024, TMTG’s share price fell by 10%, concluding at $12.15. This is the lowest point since the company’s Nasdaq debut in March 2024.
The sharp drop in TMTG’s stock price occurred just days after the lock-up period ended. This period barred company insiders, including Trump, from selling their shares. Trump holds approximately 57% of TMTG, with his stake now estimated at around $1.4 billion. Despite the stock’s ongoing decline, Trump has stated that he has “no intention of selling” his shares.
With the end of the insider selling restrictions, there’s a growing concern that major shareholders might start selling their shares, leading to a further decrease in the stock price. United Atlantic Ventures and Patrick Orlando, whose ARC Global Investments II fund facilitated TMTG’s public debut, own roughly 11% of the company’s shares. Market analysts have cautioned that any significant sale by these stakeholders could further depress the stock price.
Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, said, “Not only will the possible new selling activity affect DJT’s stock price directly, but it will also increase DJT’s stock lending pool, which will facilitate increased short selling in the stock,” during a recent interview.
Since its promising start, TMTG’s stock has seen a significant decline. The company’s market capitalization soared to almost $10 billion soon after its Wall Street debut but has since dwindled to $2.4 billion. The share price has dropped 17% since a week ago, when the lock-up period ended. Monday’s drop represented a new low for the company, which has been grappling with restoring investor confidence amidst ongoing political and financial uncertainties.
Analysts have observed that while TMTG initially gained from Trump’s supporters and retail traders betting on his potential presidential comeback, the company has struggled to maintain this momentum. Recent losses have exceeded the decrease in PredictIt betting odds that Trump would win the 2024 election. As of Monday, PredictIt contracts for a Trump victory were trading at 46 cents, down from 69 cents in mid-July.
The broader political climate has also contributed to the decline in TMTG’s stock. Though recent polls show Trump leading in key states like Arizona, Georgia, and North Carolina, he is in a close race against Vice President Kamala Harris. However, TMTG has failed to convert these political advancements into stock market stability.
Compounding the uncertainty, other early investors in TMTG have not pledged to retain their shares. ARC, a key stakeholder, might sell a substantial part of its holdings. Regulatory filings reveal that ARC and United Atlantic Ventures control a large portion of the outstanding shares. A Delaware judge recently ruled that TMTG violated an agreement with ARC, potentially resulting in additional stock compensation for them.
The end of the lock-up period and the ensuing drop in stock value are anticipated outcomes, given the speculative nature of the stock and the influence of political factors, according to a financial expert. The situation presents challenges for both TMTG and its shareholders.
Despite the gloomy immediate outlook, Trump remains hopeful about TMTG’s future, stating that the company intends to introduce innovations soon. The company ended its last quarter with $344 million in cash and no debt, providing some financial stability. However, the dramatic drop in the stock’s value has ignited concerns of continued losses.
