On Wednesday, Trump Media & Technology Group experienced a notable downturn in its stock price, witnessing a 2.9% decline to $36.40 per share. This decline occurred concurrently with a fresh challenge confronting the company, as two of the co-founders of its Truth Social platform sought permission to sell their stock before the expiration of the lockup period.
At the latest closing price, the stake held by former U.S. President Donald Trump, totaling 57% of the company, was valued at an impressive $2.94 billion. This valuation stands in stark contrast to the company’s relatively modest financial performance, reporting revenue of $4.1 million for the entirety of 2023 alongside a considerable net loss of $58.2 million.
Truth Social, marketed as a conservative alternative to established social media platforms such as Meta Platforms’ Facebook and Reddit, has struggled to garner significant user numbers, presenting a challenge to its growth prospects.
The legal landscape surrounding Trump Media & Technology Group has become increasingly complex due to ongoing disputes between key stakeholders. In February, Wesley Moss and Andrew Litinsky, co-founders of Truth Social, lodged a complaint seeking to prevent Trump from taking actions that would dilute their combined 8.6% stake in Trump Media. In retaliation, Trump filed a lawsuit against Moss and Litinsky, alleging improper setup of the company.
In a recent twist, Moss and Litinsky amended their lawsuit to include a request for permission to sell their shares in Trump Media ahead of the expiration of the six-month lockup period. This development has raised eyebrows among investors and market observers, as an influx of shares into the market could potentially facilitate short selling activities, with investors aiming to profit from a decline in the company’s stock price.
Meanwhile, Trump himself is subject to the same six-month lockup period, barring him from selling his Trump Media shares. However, he retains the option to seek a waiver from the company’s board, which notably includes one of his sons and several former members of his administration.
These legal battles and uncertainties surrounding the lockup period have injected additional complexity into the situation, casting doubt on the future trajectory of Trump Media & Technology Group’s stock and leaving investors cautious amid ongoing developments in the company’s legal and financial landscape.