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Trump Media shares plummeted another 18.3 per cent on Monday after the company filed to register millions of additional shares – marking the latest blow for the struggling stock as it’s majority stakeholder Donald Trump goes on trial.
When Wall Street opened at 9.30am ET, the stock dropped by a hefty 13 per cent and continued falling throughout the day, down by 17.5 per cent as of 2.45pm ET.
By the end of trading in New York Trump Media & Technology’s stock had fallen a total of 18.3 per cent, wiping hundreds of millions of dollars from its value.
The company was valued at around $8bn after its launch last month, but since has seen 60 per cent of its value erased.
The latest dip can be attributed to a Securities and Exchange Commission (SEC) filing in which the Trump Media & Technology Group (TMTG) said it was proposing to release 21.4 million shares of common stock.
Trump Media, the parent company of Truth Social, said the plan – a move that could help the company at a time it is losing money – was issuable “upon the exercise of warrants”, which give investors the ability to buy shares of stock at a certain price in a specific timeframe.
However, issuing new stock can devalue existing shareholders’ stock.
The latest plunge in share price came the same morning that Mr Trump headed to Manhattan Criminal Court for the start of his first criminal trial.
Jury selection began on Monday morning in the case where the former president is facing 34 felony counts of falsifying business records over a hush money payment to adult film star Stormy Daniels to silence a story about an alleged affair ahead of the 2016 presidential election.
The former president is the majority stakeholder in Trump Media.
Exercise warrants are a common part of special-purpose acquisition company (SPAC) deals like the one Trump Media took part in when it went public back in March.
Trump Media merged with the shell company Digital World Acquisition Corp (DWAC) to go public on NASDAQ under the ticket “DJT”. On its first day, shares were selling for approximately $58.
But the share value quickly plummeted in the following days. Less than a week later, shares were selling at $48.66.
On Monday, shares were selling for less than half the value of opening day, at just $28.30.
Though the share price fall is not directly related to Mr Trump’s criminal trial, the company did disclose in its latest SEC filing that if Mr Trump becomes less popular or if there are new controversies it could “adversely” affect TMTG’s operations.
Trump Media predicted that it could receive up to a total of $247.1m from the exercise of warrants if the common stock trading price remains over $11.50 per share.