Shares of Trump Media & Technology Group (TMTG) have dropped to new lows, continuing a six-day streak of losses following the expiration of restrictions on insider selling. The company, which operates the Truth Social platform, saw its stock price fall by 10% on Monday, September 23, 2024, closing at $12.15—its lowest point since TMTG’s debut on the Nasdaq in March 2024.
This sharp decline came just days after the lock-up period, which prevented company insiders, including former President Donald Trump, from selling their shares, which had expired. Trump owns approximately 57% of TMTG, and his stake is now valued at around $1.4 billion. Despite the ongoing stock plunge, Trump announced he has “no intention of selling” his shares.
The expiration of the insider selling restrictions has raised concerns that other major shareholders could begin offloading their shares, further impacting the stock price. According to regulatory filings, United Atlantic Ventures and Patrick Orlando, whose ARC Global Investments II fund facilitated the merger that took TMTG public, own about 11% of the company’s shares. Analysts have warned that any significant sale by these stakeholders could cause the stock price to fall even further.
“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,” said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, in a statement.
TMTG’s stock has faced a dramatic downturn since its early days. After reaching nearly $10 billion in market capitalization shortly after its Wall Street debut, its value has since shrunk to $2.4 billion. The company’s share price has fallen 17% since last Thursday, when the lock-up period ended. Monday’s decline marks a new low for the company, which has struggled to regain investor confidence amidst ongoing political and financial uncertainties.
Market analysts note that while TMTG initially benefitted from Trump supporters and retail traders betting on his potential return to the presidency, the company has struggled to maintain momentum. Losses in recent months have outpaced the reduction in PredictIt betting odds that Trump would win the 2024 election. PredictIt contracts for a Trump victory were trading at 46 cents on Monday, down from 69 cents in mid-July.
The broader political landscape has also exacerbated the decline in TMTG’s stock. Recent polls have shown Trump leading in battleground states like Arizona, Georgia, and North Carolina, but it remains a tight race against Vice President Kamala Harris. Despite this, TMTG has not been able to translate these political gains into stock market stability.
Adding to the uncertainty, other early investors in TMTG have not made commitments to hold onto their shares. ARC, one of the key stakeholders, could sell off a significant portion of its holdings. According to a regulatory filing, ARC and United Atlantic Ventures control a substantial portion of the outstanding shares, and a Delaware judge recently ruled that TMTG breached an agreement with ARC, potentially giving them more stock in compensation.
The situation poses difficulties for both the company and its shareholders. According to a financial expert, the end of the lock-up period and the resulting drop in stock value are expected, considering the stock’s speculative nature and the influence of political factors.
Although Trump has remained optimistic about TMTG’s future, stating that the company plans to roll out innovations soon, the immediate outlook appears grim. The company ended its last quarter with $344 million in cash and no debt, which offers some financial stability, but the stock’s sharp decline has sparked fears of continued losses.