Trump Media Spirals As 37% Dive From Debut Close Erases Billions

Trump Media Technology Group Corp. has wiped out some $2.8 billion in value as the meme stock struggles to captivate the retail traders who helped power initial gains.

Bailey Lipschultz

08 Apr 2024, 10:59 PM IST

The Truth Social app on a smartphone arranged in New York, US, on Friday, March 22, 2024. Shareholders of Digital World Acquisition Corp., a publicly traded shell company, approved a deal to merge with the Trump's media business in a Friday vote. That means Trump Media & Technology Group, whose flagship product is social networking site Truth Social, will soon begin trading on the Nasdaq stock market, reported the AP.

(Bloomberg) -- Trump Media & Technology Group Corp. has wiped out some $2.8 billion in value as some of the retail traders who frantically bid up the stock last month began to sell.

The social media company that’s mostly owned by former president Donald Trump has slumped 37% from its close on March 26. The stock fell below the level it was trading at on March 22, when investors approved its tie-up with the blank-check firm, Digital World Acquisition Corp.

Trump Media, which owns Truth Social, had soared in its first days as a public company after the private firm merged with DWAC, what the shell company was known as.

But the stock, which trades under Trump’s initials DJT, has struggled to retain the attention of individual investors who bought shares as a way to support the former president in his 2024 reelection campaign.

Trump Media Spirals As 37% Dive From Debut Close Erases Billions

As the stock slides, the paper windfall for Trump himself has dropped some $1.6 billion to roughly $2.9 billion. For Trump to benefit from the paper wealth, he’ll have to wait six months before he can sell shares under a lock-up agreement.

Read more: Trump Sues Truth Social Company Co-Founders to Zero Them Out

Trump Media has a market capitalization of nearly $5 billion even after the latest drop despite generating just $4.1 million in revenue last year. That heightened valuation has made it costly and risky to bet against the company, with short sellers facing annual financing costs of more than 450% to borrow the shares, according to brokerages.

Read more: Trump Media Is Now the Most Expensive US Stock to Bet Against

The fallout has shades of past meme stocks like GameStop Corp. and other so-called de-SPACs, companies that went public through blank-check deals, which saw initial swings in their stock performance before falling.

More than one-fifth of the nearly 500 SPAC deals that have closed since 2019 are trading below $1 each, representing a greater than 90% plunge. And dozens of them at times saw share prices surge in retail trader-fueled frenzies, meaning losses for some are far greater.

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