Trump Media stock falls after announcement of potential stake sale

Shares of Donald Trump's social media company, Trump Media & Technology Group, operating Truth Social, dropped by 15 per cent on Monday following news that the company might sell millions of additional shares in the coming months, potentially including the former president's entire stake.

Since its market debut on March 26, Trump Media saw considerable volatility, attracting both supporters of the former president and sceptics who view the stock as substantially overvalued. The company's shares have already tumbled nearly 60 per cent since its initial public offering, which occurred through a blank-check merger with Digital World Acquisition Corp. On its first day, the stock reached a peak of $70.90, but on Monday, shares were trading down 15.6 per cent at $27.56.

Monday's filing, while a standard procedure after an IPO, revealed a potential sale of 146.1 million shares, including Trump's stake of 114.8 million shares. This stake is divided between the 78.75 million shares he currently owns and an additional stake he could receive based on certain performance-based metrics.

A legal expert cautioned against interpreting the filing as a signal of significant developments, stating that such registration statements are routine for newly public companies, even if shareholders are subject to lock-up periods.

Trump, who is widely expected to be the Republican nominee for the 2024 presidential election, is currently facing trial in a Manhattan court over allegations related to hush money payments to a porn star, to which he has pleaded not guilty.

Additionally, the filing listed an additional 21.5 million shares that could be sold upon the exercise of certain warrants issued during the company's IPO.

(With Reuters inputs)