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Trump Media Shares Crisis as Initial Fervor Fades

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Shares of former President Donald J. Trump’s social media company fell just over 20 percent Monday, as fervor around the company’s public markets debut last week appeared to fade. appease.

The sale reduced the market value of Trump Media & Technology Group, which trades under the symbol “DJT,” from about $2 billion to about $6.5 billion.

The value of Mr. Trump’s majority stake in the company has fallen to about $3.7 billion, from more than $6 billion at last week’s high.

Still, Trump Media shares were higher than they were just before the company merged with a public shell company on Tuesday and began trading on the Nasdaq. Strong support for the combined company after it began trading pushed its market value up to $10 billion at one point last week.

That raised eyebrows on Wall Street, given the relatively small size of Trump Media’s business. A filing Monday showed the company generated just $750,000 in revenue in the fourth quarter of last year, bringing its total for the full year to $4.1 million. Trump Media posted a $58 million loss in 2023. It got more than $300 million in cash in its merger with the shell company.

All of the company’s revenue comes from advertising on Truth Social, the digital platform that has become Mr. Trump’s primary means of reaching his supporters and lambasting his detractors, political opponents and other perceived enemies, including including prosecutors and judges involved in his criminal and civil cases. .

Over the weekend, Mr. Trump shared a video on the platform that featured an image of a sticker on the back of a truck depicting President Biden strapped in.

Trump Media stands out on Wall Street as the most “shorted” stock on the market – stocks that investors are betting will fall. Derivatives linked to the stock, which allow investors to speculate on its future price, have also been popular, suggesting traders are preparing for greater price swings – both up and down. decline – in the coming weeks.

It is not uncommon for so-called meme stocks, strongly influenced by the dynamism and enthusiasm of a mass of small shareholders, to be extremely volatile, subject to sudden and steep rises and falls.

One of the questions surrounding Trump Media is whether the company’s board will relax a provision that barred Mr. Trump from selling shares or using his shares as collateral for a loan for six months after the start of stock trading. But in the filing Monday, the company said the board made no changes to the lock-up provision.

So Mr. Trump is unlikely to rely on his roughly 60% stake in Trump Media to post $175 million bail in his appeal of a judge-imposed civil fraud penalty. of New York State.

Mr. Trump, the presumptive Republican presidential nominee, is not a member of the company’s seven-member board of directors. But because of its significant ownership, Trump Media is considered a “controlled company,” where more than 50 percent “of the voting power for the election of directors is held by an individual.”

Trump Media’s board of directors is already under Mr. Trump’s sway, as its members include his eldest son and three former members of his administration. Mr. Trump, who was president of Trump Media before the merger with the shell company, is no longer an officer or director of the company today.

After the merger, Trump Media adopted a code of ethics that requires “relevant persons” – board members and employees – to engage in political activities only as private citizens. If these individuals participate in political activities, they “must make clear that their opinions and actions are their own, and not those of the company,” according to the code.

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