The stock of former President Donald J. Trump’s social media company dropped by more than 20 percent on Monday, following the excitement surrounding its initial public offering last week.
This decline caused Trump Media & Technology Group, trading as “DJT,” to lose about $2 billion in market value, bringing it down to approximately $6.5 billion.
Mr. Trump’s majority stake in the company also decreased to around $3.7 billion from its peak of over $6 billion last week.
However, Trump Media’s shares remained higher than before the company merged with a public shell company and started trading on the Nasdaq. The strong support for the merged company initially drove its market value up to $10 billion.
The market was surprised by the high valuation of Trump Media, considering its relatively small revenue. A filing on Monday revealed that the company only made $750,000 in the fourth quarter of last year, with a total revenue of $4.1 million for the year. Trump Media reported a $58 million loss in 2023 but received over $300 million in cash from the merger.
All of the company’s revenue comes from advertising on Truth Social, Mr. Trump’s primary platform for communicating with supporters and criticizing his adversaries.
Over the weekend, Mr. Trump shared a controversial video on the platform featuring an image of President Biden.
Trump Media is currently the most shorted stock on Wall Street, indicating that investors are anticipating significant price fluctuations in the future.
Meme stocks like Trump Media are known for their extreme volatility, driven by momentum and the enthusiasm of small shareholders.
There is speculation about whether Trump Media’s board will lift a restriction preventing Mr. Trump from selling stock or using his shares as collateral for six months after the company went public. The board has not made any changes to this provision.
This decision makes it unlikely that Mr. Trump will use his stake in Trump Media to cover a $175 million bond related to a civil fraud penalty.
Despite not being on the board, Mr. Trump’s significant ownership makes Trump Media a “controlled company.”
The company’s board includes Mr. Trump’s son and former administration members, all under his influence.
Post-merger, Trump Media adopted a code of ethics requiring board members and employees to engage in political activities as private individuals.
