Trump Media & Technology Group stock dropped Monday as a federal regulatory filing showed the company's intent to issue millions of additional shares.
The company, backed by former President Donald Trump, filed a "preliminary prospectus" Monday with the U.S. Securities and Exchange Commission (SEC) to offer 21.49 million shares of common stock, issuable "upon the exercise of warrants."
Trump Media cannot issue the additional shares until a registration statement with the SEC goes into effect while stock warrants allow the holder to buy shares at a certain price within a specific time frame.
The company is also looking for approval of the resale of up to 146.1 million shares from "selling securityholders," which includes Donald Trump and ARC Global Investments, according to the federal filing.
DJT stock sank 18.4% to 26.61 Monday during market action. Shares are down more than 56% in April.
Trump holds a 58% stake in the company but is prohibited from selling shares for six months. The former president's holdings are currently valued at around $2.5 billion, based on the DJT stock price.
Donald Trump is also set to receive another 36 million earnout shares. However, DJT shares must remain above $17.50 in 20 out of any 30 trading days for a 90-day period dated from March 25 for Trump to get the full incentive, according to the SEC filing.
The federal filing comes as Trump Media's first auditor resigned after being appointed just months earlier, the Financial Times reported Monday.
Trump, DWAC And Trump Media
Trump Media jumped more than 16% on March 26, its first day trading under the DJT ticker, hitting a high of 79.38 intraday. This followed Digital World Acquisition becoming Trump Media & Technology Group after successfully merging with Trump's tech and social-media platform on March 22. The special purpose acquisition company stock had rallied 35% on the day before the change to "DJT."
DWAC took Trump Media and Technology Group, or TMTG, public in a reverse merger. After a prolonged battle, DWAC stockholders voted in favor of the special purpose acquisition company's merger with TMTG. Trump Media is the parent of the conservative social-media platform Truth Social.
DJT shares have dropped more than 50% since their conversion. In 2024, DJT/DWAC has gained 57%.
Truth Social originally launched after Twitter, now X, shut down Trump's account following the Jan. 6, 2021, riot at the U.S. Capitol.
In October 2021, Truth Media and DWAC announced their plan to merge. Federal investigations delayed the proposed merger for years. However, on Feb. 14, DWAC announced the U.S. Securities and Exchange Commission (SEC) proclaimed the merger's registration statement was effective, approving the proposed combination to go forward.
The Donald Trump brand and the value of Trump Media are closely related. Trump's current status as the top Republican candidate for president figures squarely into the stock's gains so far this year. Federal charges could potentially tarnish that brand, according to company filings, although so far that has not been the case.
Trump is also chairman of TMTG while a number of his allies, including his son Donald Trump Jr., are board members.
On April 1, Trump Media & Technology reported a loss of $58.19 million in 2023 on revenue totaling $4.13 million, up from $1.47 million in 2022, according to SEC filings.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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