Current:Home > StocksDJT sinks to new low: Why Trump Media investors are feeling less bullish-DB Wealth Institute B2 Expert Reviews
DJT sinks to new low: Why Trump Media investors are feeling less bullish
View Date:2024-12-23 15:36:57
As a trading concern, Donald Trump’s social media company has become a way for investors to bet on the former president’s odds of retaking the White House.
Since going public through a special-purpose acquisition company merger in March, shares of Trump Media & Technology Group have fluctuated wildly alongside its namesake’s political fortunes.
Following Vice President Kamala Harris’ ascension to the top of the Democratic ticket, Trump has slipped in the polls and so, too, have shares of Trump Media, which owns the GOP nominee’s social media bullhorn of choice, Truth Social.
The stock drifted to a new post-merger low Tuesday, closing at $20.99. In the last 30 trading days, it has lost more than 40% of its value.
What happens if Trump sells DJT shares
In regulatory filings, Trump Media has telegraphed how critical Trump is to the company’s brand, warning that its value “may diminish” if Trump’s popularity falters.
Now another factor is weighing on the stock. Trump is less than a month away from being able to cash out his paper wealth. Trump Media has also cited Trump's divestment of DJT stock as one of the top risks to its business.
Trump Media is a major contributor to Trump’s net worth. Its market value is hovering around $4 billion even though the company is losing money and has nearly no revenue.
Your wallet, explained. Sign up for USA TODAY's Daily Money newsletter.
Trump owns about 60% of the company's outstanding stock. He is expected to be able to start selling shares as soon as Sept. 20 when a six-month lockup period that has prevented insiders from unloading their holdings is expected to lift.
Trump has not indicated if he intends to sell shares in Trump Media and his campaign declined to comment.
Cashing in shares could help Trump pay his mounting legal bills but could antagonize supporters who have shoveled money into the stock and could be viewed as a vote of no confidence in the company.
The prosecutor in Trump’s federal election interference case secured a new indictment against Trump on Tuesday.
What more Trump Media shares mean for investors
Another key factor in the Trump Media stock decline is a deal Trump Media reached in July with Yorkville Advisors to register and sell up to $2.5 billion worth of new shares, says University of Florida finance professor Jay Ritter.
On the one hand, the deal could boost cash per share on the company’s balance sheet from $1.50 per share to about $4.50 per share, Ritter said.
“This increase would reduce the downside potential for the stock,” he said.
But there’s a caveat.
“Any upside for the company is dependent on coming up with a business strategy to generate revenue and profits,” Ritter said. “So far, the company has failed to find a successful strategy.”
What's more, additional shares issued through the Yorkville agreement could be putting downward pressure on the stock price, according to Ritter.
Even if Trump does not sell shares when the lock-up period ends, other insiders may, increasing the public float even more, he added.
“The price might be drifting down partly in anticipation of these share sales,” Ritter said.
veryGood! (6)
Related
- California Gov. Gavin Newsom will spend part of week in DC as he tries to Trump-proof state policies
- The Amazing Race of Storytelling: Search for story leads to man believed to be Savannah's last shoe shiner
- Surgeons perform second pig heart transplant, trying to save a dying man
- Fulton County DA investigator accidentally shoots herself at courthouse
- 'Cowboy Carter' collaborators to be first country artists to perform at Rolling Loud
- United States and China launch economic and financial working groups with aim of easing tensions
- NAACP signs agreement with FEMA to advance equity in disaster resilience
- Sabato De Sarno makes much anticipated debut at Gucci under the gaze of stars like Julia Roberts
- Oprah Winfrey Addresses Claim She Was Paid $1 Million by Kamala Harris' Campaign
- Jailhouse letter adds wrinkle in case of mom accused of killing husband, then writing kids’ book
Ranking
- Indiana man is found guilty of murder in the 2017 killings of 2 teenage girls
- Sabato De Sarno makes much anticipated debut at Gucci under the gaze of stars like Julia Roberts
- Ex-New Mexico sheriff’s deputy facing federal charges in sex assault of driver after crash
- From an old-style Afghan camera, a new view of life under the Taliban emerges
- Wind-whipped wildfire near Reno prompts evacuations but rain begins falling as crews arrive
- Targeted strikes may spread to other states and cities as midday deadline set by auto workers nears
- Canada-India relations strain over killing of Sikh separatist leader
- Netanyahu tells UN that Israel is ‘at the cusp’ of an historic agreement with Saudi Arabia
Recommendation
-
When is 'The Golden Bachelorette' finale? Date, time, where to watch Joan Vassos' big decision
-
Late-day heroics pull Europe within two points of Team USA at 2023 Solheim Cup
-
Sophie Turner Reunites With Taylor Swift for a Girls' Night Out After Joe Jonas Lawsuit
-
Tropical Storm Ophelia heads for the East Coast after a surprising, confusing start.
-
About Charles Hanover
-
Teenager arrested after starting massive 28-acre fire when setting off fireworks
-
Prince William's Earthshot Prize announces finalists for 2023 awards
-
North Carolina legislature gives final OK to election board changes, with governor’s veto to follow