Trump Media Stock Soars as Shares of Truth Social Parent Company Rise

Trump Media, the parent company of Truth Social, the platform launched by former President Donald Trump, has experienced a significant increase in its stock value this week. Trading under the DJT ticker on Nasdaq, the stock rose by approximately 21 percent on Monday and was up by around 10 percent on Tuesday morning. Although there was a slight decline in the early morning trading period, the stock remained up by about 3 percent as of 11 a.m. ET, trading at over $34.50 per share. This marked a notable improvement from its closing price of $27 on Friday.

Since its initial public offering in March, following a merger with a blank-check company, Trump Media’s stock has been subject to volatile swings. Initially, the stock soared to nearly $80 per share but later dropped to as low as $22.55 in recent weeks before starting to rise again. The decline in stock prices occurred following former President Trump’s guilty verdict on charges of falsifying business records to conceal payments during the 2016 election. Despite this setback, Trump Media’s stock has shown signs of recovery.

It is important to note that former President Trump, who is also the presumptive Republican presidential nominee for the next election, holds a majority stake in Trump Media. However, he is presently restricted from selling his shares until September unless approved by the company’s board. Nevertheless, due to his holdings in Trump Media, his estimated net worth has risen to approximately $6 billion as of Tuesday. This increase is based on separate estimates provided by Forbes and Bloomberg’s Billionaire’s Index, which suggest that the former president’s net worth grew by approximately $900 million on Monday alone.

Trump Media recently revealed in a filing with the U.S. Securities and Exchange Commission that it expects to generate more than $69.4 million through the exercise of previously issued stock warrants. These warrants allow stockholders to purchase shares at a predetermined price within a specific timeframe. In a press release, the company stated that exercising all warrants covered by the Registration Statement could yield up to approximately $247 million in proceeds. Additionally, $40 million of restricted cash on the company’s balance sheet is set to become unrestricted as a result of the Registration Statement becoming effective. This is in addition to the over $200 million in unrestricted cash held by the company as of June 18, 2024.

Trump Media CEO Devin Nunes, a former Republican congressman, expressed optimism about the company’s future. Nunes mentioned that Trump Media is well-positioned to pursue TV streaming, platform enhancements, and potential mergers and acquisitions. He also highlighted that the company already has around 620,000 retail shareholders.

Despite the recent positive developments, some analysts have classified Trump Media’s stock as a “meme stock” due to its significant fluctuations. Art Hogan, chief market strategist at B. Riley Wealth, commented on the volatility of the stock in late May, following the conviction of former President Trump. Hogan acknowledged that the valuation of Trump Media’s stock has always been uncertain, as the company is not currently profitable and is trading at a seemingly unfathomable level.

During a downturn in the stock price last month, Trump Media officials accused “naked” short sellers of manipulating the market. Naked short selling involves selling shares that an investor neither owns nor has borrowed. Typically, traders must borrow or confirm the borrowability of a stock before engaging in short selling. In a letter to Nasdaq, Nunes raised concerns about the “anomalies” surrounding the trading of Trump Media shares and cited data from the SEC. He specifically requested data about financial firms such as Citadel Securities, Jane Street Capital, and UBS. Nunes urged Nasdaq to fully cooperate with any congressional or other investigations into these firms by promptly providing relevant data within its possession.

In summary, Trump Media has experienced a notable increase in its stock value this week. Despite previous fluctuations, the stock has shown signs of recovery. Former President Trump’s net worth has also risen due to his holdings in Trump Media. The company expects to generate significant proceeds through the exercise of previously issued stock warrants and has expressed optimism about its future prospects. However, some analysts consider the stock to be a meme stock, and Trump Media officials have raised concerns about market manipulation by naked short sellers. Overall, the situation surrounding Trump Media’s stock remains dynamic and subject to ongoing developments.