Trump Media stock drops in Friday trading after former president’s guilty verdict
Shares of Trump Media & Technology Group tumbled more than 5% on Friday afternoon, extending a slide from the previous evening following the news of Donald Trump’s guilty verdict in his criminal hush money trial.
Trump was convicted on 34 counts of falsifying business records by a New York jury. In the wake of the verdict, shares of Trump Media & Technology Group, the parent company of Truth Social, plummeted by as much as 15%. Trump owns 65% of the company’s shares.
After sinking to $44 per share in after-hours trading, the stock recovered slightly during Friday’s regular trading session, reaching $49.08 by 2:26 p.m. ET.
The parent company of Truth Social has drawn comparisons to GameStop and AMC, often classified as meme stocks. By conventional Wall Street standards, Trump Media is considered overvalued compared to other social media companies.
“Meme stocks thrive on attention,” said Jay Ritter, a finance professor at the University of Florida, in an interview with USA TODAY on Friday. “The guilty-on-all-counts verdict was certainly negative attention, but sometimes any news is better than no news.”
Ritter predicts continued volatility in the short term, with the stock ultimately collapsing in the long term.
The Public Debut of Trump Media
Trump Media was founded by Andy Litinsky and Wes Moss in 2021 after Trump was banned from major social media platforms following the January 6 Capitol attack. The company went public on the Nasdaq on March 26 via a merger with Digital World Acquisition Corp., a special purpose acquisition company (SPAC), announced in 2021. The stock had a strong debut, with prices soaring due to support from Trump’s followers.
Since then, the stock has experienced significant volatility, ranging from a high of $79.38 per share on March 26 to a low of $22.84 on April 16.
Financial Struggles
Regulatory filings indicate the company operated at a loss in 2023, earning about $4 million in revenue while incurring over $58 million in losses. Accounting firm BF Borgers CPA PC stated that these losses “raise substantial doubt about its ability to continue as a going concern.” The firm has since been shut down amid allegations of “massive fraud,” according to an SEC release.
An unaudited filing shows Trump Media reported a net loss of $327.6 million and revenue of $770,500 in the first quarter of 2024.
Trump’s Mounting Legal Expenses
Trump holds over 114 million shares of Trump Media, which he cannot cash in until the end of September. These shares were once considered a potential source of funding for his legal fees in various cases. Earlier this year, Trump was ordered to pay a combined $537 million in two civil cases, both of which he is appealing.
In April, Trump posted a reduced bond of $175 million, funded by California billionaire Don Hankey, to prevent asset seizure in the New York fraud case.
Additionally, Trump has incurred $10,000 in fines for gag order violations in his hush money criminal trial. Sentencing for this conviction is set for July 11.
