Shares of Trump Media & Technology Group Corp (NASDAQ:DJT), the parent company of Truth Social, witnessed a sharp decline on Monday as the company initiated the registration of shares and warrants, potentially allowing insiders, including former President Donald Trump, to capitalize on their holdings earlier than anticipated.
The stock tumbled 15% to $27.83 in New York trading, marking its lowest level since January. Warrants associated with the stock also experienced a 6.9% drop to $12.75. Trump Media’s market value has plummeted by over $5 billion from its peak in March.
This downturn has notably diminished the potential windfall for Trump, from over $5 billion to $2.3 billion. However, if the stock maintains a level above $17.50, insiders could receive an additional 40 million shares, valued at $1.2 billion.
The company filed to register up to 146 million common shares and 21 million shares issuable upon warrant exercise, along with 4 million warrants to purchase common stock. These securities are held by or underlie holdings of existing Trump Media shareholders.
While the registration of shares for resale is a customary procedure for blank-check deals like Trump Media’s, it does not necessarily signify immediate or forthcoming sales.
The US Securities and Exchange Commission must review the filing before insiders can potentially commence selling stock with board approval. Presently, insiders are restricted from selling shares until September.
Trump Media has garnered support from individual investors backing Trump’s 2024 re-election bid. Although the stock initially surged 270% at its debut, it has since dropped over 60%.
Trump is entangled in legal battles, including a lawsuit from two Trump Media co-founders alleging he attempted to dilute their stakes and imposed a six-month lockup on their shares. This lockup, they contend, will detrimentally affect their finances. Trump himself faces similar restrictions.
In addition to legal challenges, Trump is embarking on his first criminal trial in Manhattan, accused of falsifying business records related to a pre-election payment to a porn star in 2016, among other criminal prosecutions.
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