Trump Media shares tumble Monday as company files to issue millions of shares

Trump Media & Technology Group's stock plunged more than 18% on Monday after the company took steps to sell millions of new shares.

Trump Media, the parent company of social media platform Truth Social, filed to register the sale of up to 146.1 million shares of stock, including nearly 115 million shares owned by Trump. The company also listed an additional 21.5 million shares for possible sale related to warrants - which give investors the right to buy or sell shares at a specific price for a certain period of time.

It is standard practice for companies that have recently gone public through a listing with a special-purpose acquisition company (SPAC) to file a stock resale application, as Trump Media did last month after listing with Digital World Acquisition Corp. But making more shares available for purchase could dampen the value of existing shareholders' holdings in the company, which meant that the already volatile stock price swung sharply again on Monday.

Shares of Trump Media were down more than $6 early Monday afternoon, trading at $26.55 as of 2:25 p.m. ET on Nasdaq Resonance. That's a drop of more than 60% from the company's high in late March after it debuted on the stock market.

The Trump media's next step

Supervisory filings earlier this month showed that Trump Media had revenues of about $4 million and losses of more than $58 million in 2023. According to the auditor who examined the company's finances, its operating losses "raise significant doubt about its ability to continue as a going concern."

Given the company's industry merit, some hope it will move quickly to sell any possible assets.

"They're burning through a lot of cash, and their stock price is high right now," said Derek Horstmeyer, a finance professor at George Mason University in Virginia who specializes in corporate finance. " I don't see any reason (for them not to jump out)."

According to Trump Media's latest filing, the company expects to generate approximately $247.1 million in revenue from the exercise of the warrants.

The Value of the Trump Media

Trump Media's market capitalization and Trump's net worth - both of which are tied to the company's stock - have taken a hit as the stock price has fallen. As of Monday, the company's market capitalization was more than $3.5 billion, down from a high of nearly $8 million.

As for Trump's net worth, the former president of Massachusetts is no longer listed in the Bloomberg Billionaire's Index, which lists the world's top 500 richest people, each worth at least $5.7 billion. According to Forbes, his current net worth is close to $4 billion.

Trump owns nearly 60% of Trump Media, totaling 78.75 million shares. He cannot sell the shares until September without approval from the Trump Media board.

The Dow Jones stock price is experiencing turbulence: Trump's Truth Social to face more turbulence

More volatility expected

Experts warned early on about the company's expected volatility, comparing Trump Media to themed stocks like GameStop and AMC. The company's latest filing notes that the company's success depends in part on the reputation and popularity of Trump, who is currently on trial for allegedly falsifying business records to cover up a hush money payment from a porn star.

"I expect stock prices to continue to fluctuate sharply, with a long-term trend downward, but they could jump on any given day," said Jay Ritter, a professor at the University of Florida.

This article originally appeared on USA Today:Trump media stocks fall as company prepares to sell more shares