Investing in Trump Media & Technology Group (DJT) may have seemed like a lucrative opportunity for stakeholders, especially with former President Donald Trump involved. However, recent developments have seen the stock take a hit, dropping over 6% to hit its lowest level since going public in March.
The drop comes after the expiration of DJT’s lockup period, which allowed stakeholders, including Trump himself, to sell or transfer their shares. Despite the expiration, Trump has stated that he has no intention of selling his stake, citing his use of the platform as a means of communication.
The purpose of a lockup period is to protect the interests of a newly public company and maintain stability before its founders can cash out. For Trump Media, this stability has been compromised as shares have plummeted about 15% since the lockup period ended.
Trump’s stake in DJT currently stands at roughly 60%, giving him a stake worth around $1.5 billion based on the current market cap of $2.5 billion. This is a significant decline from the initial value of over $4.5 billion when the company went public in March.
The rocky ride for Trump Media began with its merger with Digital World Acquisition Corp and subsequent public debut on the Nasdaq. The stock’s performance has been closely tied to volatile news cycles, such as the rise and fall after Biden’s stumble in a debate with Trump and subsequent withdrawal from the presidential race.
Furthermore, legal troubles have also plagued Trump, impacting the company’s stock price. Trump was found guilty on 34 counts of falsifying business records related to the 2016 presidential campaign, leading to a 5% drop in shares the day after the conviction. His sentencing has been delayed until November 26.
As Truth Social, Trump’s alternative social media platform, attempts to rival established players like Facebook and Twitter, concerns about the company’s fundamentals have persisted. DJT reported a net loss of $16.4 million in the second quarter, with expenses related to the SPAC deal accounting for half of that amount. Revenue for the quarter also experienced a 30% year-over-year decrease.
Investors in DJT may well be questioning the long-term viability and growth potential of Trump Media & Technology Group as the company faces internal and external challenges. Keep an eye on Extreme Investor Network for more in-depth analysis and insights on market movers like DJT to make informed investment decisions.