Major Sell-Off Potential Sends Trump Media Stock Tumbling

Trump Media’s stock plummets as major investors gain freedom to sell shares, raising questions about Truth Social’s future.

At a Glance

Trump Media’s stock fell nearly 6% as the six-month lockup period expired.
Former President Trump, holding a 57% stake worth $1.7 billion, claims he won’t sell.
The stock has dropped over 76% from its post-merger high six months ago.
Truth Social struggles with less than 1 million daily active users.

Trump Media’s Stock Takes a Dive

Trump Media, the parent company of Truth Social, saw its stock tumble to new lows on Thursday as the six-month lockup period came to an end. This expiration allows major investors, including former President Donald Trump, to sell their shares for the first time since the company went public. The stock closed nearly 6% lower at $14.70, marking a significant decline from its post-merger highs.

The end of the lockup period has sparked concerns among investors about potential sell-offs. Despite these worries, Trump, who holds a substantial 57% stake now worth about $1.7 billion, has maintained that he has no intention of selling his shares.

Truth Social’s Struggle for Relevance

Truth Social, created after Trump was banned from major social media platforms, has faced significant challenges in securing a substantial user base. As of April, the platform reportedly had less than 1 million daily active users, a fraction of the user base of mainstream social media sites.

This struggle for relevance has contributed to the company’s financial woes. In the first half of the year, Trump Media reported a loss of around $344 million on revenue of less than $2 million, highlighting the platform’s difficulty in monetizing its limited user base through ad sales.

Market Volatility and Political Influence

The stock’s performance has been highly volatile, often influenced by Trump’s political activities and legal challenges. For instance, the stock surged after Trump survived an assassination attempt but fell again when Kamala Harris replaced Biden as the Democratic nominee. Similarly, it rose before the September 10 presidential debate but plummeted after Trump’s poor performance.

Despite its financial struggles, Trump Media maintains a market capitalization of nearly $3 billion, largely supported by retail investors. However, the recent stock decline has brought the company’s market value more in line with analysts’ valuations, reflecting growing skepticism about its long-term prospects.

Legal Challenges and Future Uncertainties

Trump Media faces additional challenges beyond its stock performance. A Delaware court recently ruled in favor of early investor Patrick Orlando, awarding him about 800,000 more shares, which caused a 6.6% drop in Trump Media shares. The company also unsuccessfully sought an injunction to block ARC Global from selling shares immediately after the lockup period ended.

As Trump Media navigates these challenges, its future remains uncertain. The company’s fortunes are closely tied to Trump’s use of Truth Social and his political career. With the 2024 presidential election on the horizon, the platform’s relevance and the company’s stock performance may continue to fluctuate based on political developments and Trump’s ability to maintain his online presence.