Trump Media Stock Tumbles as SEC Decision Could Flood Market with New Shares

Key Takeaways

• Trump Media shares tumbled Thursday after a decision from the Securities and Exchange Commission (SEC) paved the way for more of its shares to be sold.
• The owner of the Truth Social app announced that the SEC declared Trump Media’s registration statement effective after the bell Tuesday, opening the door for several investors to exercise warrants.
• The SEC action could mean more than 14 million new Trump Media shares may hit the market if investors sell via the warrants.
• Trump Media CEO Devin Nunes said the declaration from the SEC was “another milestone” for the company, and said it believes it is well-positioned to expand.

Trump Media & Technology Group (DJT) or TMTG shares tumbled over 14% Thursday after the Securities and Exchange Commission (SEC) declared the company’s registration statement effective—which could flood the market with millions more Trump Media shares.

The media company of former President Donald Trump announced the development after the bell Tuesday, and the stock fell in extended trading then, as the SEC’s decision means that more than 14 million shares could hit the market if a number of investors exercise warrants and offload their shares, as outlined in the company’s prospectus. With markets closed Wednesday for the Juneteenth holiday, Thursday was the first full day of trading after the announcement.

Exercised Warrants Could Net TMTG Nearly $250 Million

The company said in Tuesday’s statement that all the warrants being exercised for cash could generate up to $247 million in proceeds, along with a further $40 million that has become unrestricted as a result of the registration statement being declared effective.

CEO Devin Nunes called the announcement “another milestone” for TMTG and Truth Social, the social media platform TMTG operates, and said the company expects to be “well-positioned” to tackle new areas of growth like expanding Truth Social and pursuing a streaming television product.

Trump Media shares have experienced significant volatility since it merged with Digital World Acquisition Corp. and became a public company in March.

Thursday’s Losses Add to Recent Volatility

A number of recent events have caused substantial swings in the company’s stock, from the company’s move informing Nasdaq executives it believed there was “naked short selling” of its stock to filings of intentions to issue millions of new shares and earnings reports that revealed substantial losses.

The stock has fallen in all but two trading sessions since Trump was convicted on 34 counts of falsifying business records in a New York court on May 31.

Trump Media shares fell 14.6% to close at $26.75 Thursday, their lowest point in more than two months.

Overall, Trump Media faces challenges ahead as it navigates through market volatility and regulatory hurdles. The recent decision by the SEC to declare the company’s registration statement effective has triggered a significant drop in share prices, indicating potential concerns among investors about an influx of new shares hitting the market.

CEO Devin Nunes remains optimistic about the company’s future prospects, citing new growth opportunities in expanding Truth Social and venturing into streaming television. However, the road ahead may be bumpy as Trump Media works to stabilize its stock performance and regain investor confidence.

Investors will be closely watching how Trump Media manages its current challenges and whether it can successfully execute its growth strategies amid market uncertainties. The coming weeks will be critical for the company as it seeks to navigate through turbulent waters and emerge stronger on the other side.

As developments unfold, it will be essential for investors to stay informed about Trump Media’s progress and how it adapts to changing market conditions. The company’s ability to address current issues and capitalize on new opportunities will ultimately determine its long-term success in the competitive media landscape.

Stay tuned for more updates on Trump Media’s journey and how it navigates through the complexities of the market in the coming months.

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