Donald Trump’s social media company saw its shares plummet by over 20% on Monday, just days after it commenced public trading under the DJT ticker symbol.
The decline occurred after Trump Media & Technology Group disclosed a loss of nearly $60 million (£48 million) in the previous year, with revenue amounting to only around $4 million.
This downturn in share price caused a notable reduction of the former president’s net worth by $1 billion, as reported by Bloomberg. Despite a surge in shares last week, resulting in the company being valued at $11 billion, experts cautioned that a decline was inevitable. This warning stemmed from concerns over Truth Social, the company’s primary product, experiencing user losses and financial losses.
The rapid increase in share price drew parallels to the meme stock frenzy of the pandemic era, wherein companies like GameStop and AMC witnessed soaring share prices despite weak fundamentals such as revenue. Meme stocks are those that experience sudden popularity on social media platforms, prompting online investors to hastily purchase shares.
On Monday, shares of Trump Media, which generates its revenue solely through advertising on Truth Social, dropped by $13.30 to $48.66. Nevertheless, they remain up by nearly 200% year-to-date.
The increase has been fueled by individual investors, many of whom seem to be expressing solidarity with the former president as he faces mounting legal challenges and associated expenses.
Mr. Trump maintains a nearly 60% ownership interest in the company and could potentially realize a billion-dollar profit when he eventually sells his shares—however, he is prohibited by law from doing so for another six months unless granted a waiver by the company’s board.
But these investors are making a bet on a company that, in a special filing on Monday, told the Securities and Exchange Commission (SEC) it “expects to continue to incur operating losses and negative cash flows from operating activities for the foreseeable future”.
The increase has been fueled by individual investors, many of whom seem to be expressing solidarity with the former president as he faces mounting legal challenges and associated expenses.
Mr. Trump maintains a nearly 60% ownership interest in the company and could potentially realize a billion-dollar profit when he eventually sells his shares—however, he is prohibited by law from doing so for another six months unless granted a waiver by the company’s board.
According to the financial filing, Trump Media paid about $40m in interest expenses and $16m in operating losses in 2023.
The company said its management had “substantial doubt” that it “will have sufficient funds to meet its liabilities as they fall due”.