Former President Donald Trump now faces a new financial challenge.
Trump Media & Technology Group (TMTG) shares have hit a new low, marking a six-day downward trend after the lifting of restrictions on insider selling. The company, which runs the Truth Social platform, experienced a 10% drop in its stock price on Monday, September 23, 2024. It closed at $12.15, the lowest since TMTG’s Nasdaq debut in March 2024.
The significant decrease occurred shortly after the lock-up period ended, which had previously barred company insiders, including the former President, from selling their shares. Trump, who owns about 57% of TMTG, now has a stake worth roughly $1.4 billion. Despite the stock’s continuous decline, Trump has stated he has “no intention of selling” his shares.
With the end of insider selling restrictions, there are rising concerns that other major shareholders may start selling their shares, further affecting the stock price. Regulatory filings reveal that United Atlantic Ventures and Patrick Orlando, whose ARC Global Investments II fund facilitated TMTG’s public merger, own roughly 11% of the company’s shares. Any significant sale by these stakeholders could lead to a further fall in the stock price, analysts warn.
“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,” mentioned Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
Since its initial days, TMTG’s stock has faced a steep decline. Despite reaching a market capitalization of nearly $10 billion shortly after its Wall Street debut, its value has now shrunk to $2.4 billion. The company’s share price has fallen 17% since last week, when the lock-up period ended. Monday’s decline marked a new low for the company, which has struggled to rebuild investor confidence amidst ongoing political and financial uncertainties.
Market analysts have noted that despite early support from Trump backers and retail traders anticipating his possible return to the presidency, the company has had difficulty maintaining momentum. Recent losses have exceeded the decrease in PredictIt betting odds predicting a Trump victory in the 2024 election. PredictIt contracts for a Trump win were trading at 46 cents last Monday, a drop from 69 cents in mid-July.
The wider political landscape has further contributed to the decline in TMTG’s stock. While recent polls have shown Trump leading in key battleground states like Arizona, Georgia, and North Carolina, his race against Vice President Kamala Harris remains closely contested. However, TMTG has been unable to convert these political advances into stock market stability.
Furthering the uncertainty, other initial investors in TMTG have not pledged to retain their shares. ARC, a key stakeholder, could potentially sell a significant portion of its holdings. Regulatory filings indicate that ARC and United Atlantic Ventures hold a large amount of the outstanding shares. A Delaware judge recently ruled that TMTG violated an agreement with ARC, possibly leading to them receiving more stock as compensation.
This scenario poses challenges for both the company and its shareholders. A financial expert stated that the end of the lock-up period and the subsequent drop in stock value were anticipated, given the stock’s speculative nature and the influence of political factors.
Despite the challenging outlook, Trump maintains a positive view of TMTG’s future, announcing plans for upcoming innovations. The company ended its last quarter with $344 million in cash and no debt, providing some financial stability. However, the stock’s sharp decline has ignited concerns about potential continuous losses.
