Trump Media & Technology Group, the parent company of the conservative social media platform Truth Social, has registered 5.1 million shares for potential sale by certain shareholders, triggering a dip in the company’s stock price. the Stock fell 3.6% on the news, placing it among the top decliners in the Communication Services sector for the day.
The company has registered 2.55 million shares for time-to-time sale on behalf of both WorldConnect IPTV Solutions and JedTec, as well as just over 2,000 shares for MZ Group, an investor relations consultant for Trump Media. However, Trump Media will not receive any proceeds from the sale of these registered shares.
This development comes as former President Donald Trump approaches the end of a six-month lockup period, which could allow him to divest part or all of his substantial holdings in the company as soon as September 20. Trump currently holds 114.75 million shares, equating to a paper value of just over $2.5 billion, based on the current share price of $21.98. Trump owns approximately 60% of the company’s outstanding stock.
In a recent 8-K filing, Trump Media also revealed plans to purchase around 128,138 shares from certain insiders for tax remittance purposes, totaling just under $3 million. Additionally, the company announced that board members Donald Trump Jr. and Linda McMahon have been named co-chairs of Trump Vance 2025 Transition Inc., a nonprofit organization preparing for a presidential transition after the November 2024 election.
Despite its high-profile connection to the former president, Trump Media faces significant financial challenges. The company reported a net loss of $16.4 million, driven by rising operating costs, legal fees, and IT consulting expenses. These financial struggles are particularly concerning given the company’s $5 billion market cap, which appears disconnected from its thin revenue streams.
For the second quarter, Trump Media reported just $837,000 in revenue, a 30% decline from the previous year’s total of $1.19 million. While the company did generate $2.3 million in interest income, operating expenses surged to $19.5 million, resulting in an operating loss of $18.7 million, up from a $3.8 million loss a year earlier.
The disparity between Trump Media’s market valuation and its financial performance raises questions about the sustainability of the company’s business model. Truth Social, despite its positioning as an alternative to mainstream social media platforms, has struggled to attract a large user base and generate significant advertising revenue.
The end of Trump’s lockup period could add to the company’s challenges. If Trump decides to sell a substantial portion of his shares, it could signal a lack of confidence in the company’s future and lead to a sharp decline in the stock price.
The stock has already experienced significant volatility, ranging from a high of $79.38 to a low of $22, with much of the fluctuation driven by factors unrelated to the company’s core business.
As Trump Media navigates these financial and operational challenges, its future remains uncertain. Investors are advised to closely monitor developments, particularly as the end of the lockup period approaches and Trump continues to face mounting legal and financial pressures. The potential for a major sell-off looms, adding to the company’s precarious position in the market.
