Trump Media & Technology Group (TMTG), owned by former President Donald Trump, is facing a fresh challenge. The company’s shares have hit a low, marking a six-day losing streak after insider selling restrictions were lifted. The company that operates the Truth Social platform saw a 10% drop in its stock price on Monday, September 23, 2024, closing at $12.15, its lowest since TMTG’s Nasdaq debut in March 2024.
The significant drop in shares occurred shortly after the expiration of the lock-up period, which barred company insiders, including Trump, from selling their shares. Trump, who owns around 57% of TMTG, now has a stake worth approximately $1.4 billion. Despite the continuous decline in the stock’s value, Trump has declared that he has no plans to sell his shares.
The lifting of insider selling restrictions has sparked concerns about potential selling off by other significant shareholders, which could further affect the stock price. Regulatory filings show that United Atlantic Ventures and Patrick Orlando, whose ARC Global Investments II fund facilitated TMTG’s public merger, hold about 11% of the company’s shares. Analysts warn that substantial sales by these shareholders could trigger a further decrease in the stock price.
“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,” stated Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
The stock of TMTG has endured a significant decline since its initial days. After achieving close to $10 billion in market capitalization shortly after its Wall Street debut, the value has diminished to $2.4 billion. The company’s share price has dropped 17% since last Thursday when the lock-up period ended. Monday’s fall marks a new low for the company, struggling to regain investor trust amidst ongoing political and financial uncertainties.
While TMTG initially enjoyed the support of Trump advocates and retail traders betting on his potential return to the presidency, the company has struggled to maintain its momentum. Recent losses have surpassed the decrease in PredictIt betting odds that Trump would win the 2024 election. PredictIt contracts for a Trump victory were trading at 46 cents on Monday, down from 69 cents in mid-July.
The broader political landscape has also contributed to the decline in TMTG’s stock. Recent polls show Trump leading in crucial states like Arizona, Georgia, and North Carolina, but he faces a tight race against Vice President Kamala Harris. Nevertheless, TMTG has not managed to convert these political gains into stock market stability.
Further adding to the uncertainty, other early TMTG investors have not committed to retaining their shares. ARC, a significant stakeholder, could sell off a large portion of its holdings. As per a regulatory filing, ARC and United Atlantic Ventures possess a substantial amount of the outstanding shares. A Delaware judge recently ruled that TMTG breached an agreement with ARC, potentially giving them additional stock as compensation.
Both the company and its shareholders face challenges due to the situation. As per a financial expert, the conclusion of the lock-up period and the consequent drop in stock value was anticipated, given the stock’s speculative nature and the influence of political factors.
Despite the grim immediate outlook, Trump remains hopeful about TMTG’s future, stating that the company plans to introduce innovations soon. The company ended its previous quarter with $344 million in cash and no debt, offering some financial stability. However, the sharp decline in stock has ignited fears of continued losses.
