Trump Media & Technology Group, the company behind former President Donald Trump's Truth Social app, has experienced a tumultuous week on the stock market, with shares closing down nearly 20% on Friday. The company, which began public trading on the Nasdaq under the ticker DJT on March 26 following a merger with the SPAC Digital World Acquisition Corp., has seen its market capitalization plummet by nearly $5 billion since its debut.
Shares of Trump Media briefly fell below $30 during Friday's trading, hitting a new post-merger low of $29.57 before recovering slightly to close at $32.59, a mere 0.5% gain for the day. This marks a significant drop from the company's opening price of $70.90 on its first day of trading, which saw shares peak at nearly $80 and the company's market capitalization soar to $9.5 billion.
The steep decline in Trump Media's stock price comes amid mounting financial challenges for the company. In its SEC filings, Trump Media disclosed a loss from operations of almost $16 million in 2023, along with interest expenses of $39.4 million, while generating just $4.1 million in revenue. The company also revealed that it "lacks the financial resources it needs to sustain operations for a reasonable period of time," casting "substantial doubt" on its ability to continue operations.
Former President Donald Trump, who is set to begin jury selection for his criminal trial in Manhattan Supreme Court on Monday, is the largest shareholder in Trump Media, owning nearly 60% of its stock. The company's lackluster financial performance and relatively high stock price have attracted significant interest from short sellers, who are betting on a further decline in the company's share price.
According to Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, short interest in DJT stood at $208.7 million this week, with 5.44 million shares shorted. However, with fewer than 100,000 shares available to borrow for short selling, traders have faced steep financing costs. A week ago, annual financing costs for short trades in Trump Media reached as high as 900%, requiring a $30-per-share drop within a month for traders to break even. These costs have since fallen to around 200%.
Trump Media was launched in the wake of the former president's ban from X, formerly known as Twitter, following the January 6, 2021, invasion of the U.S. Capitol by his supporters. Trump, who is the presumptive Republican presidential nominee, frequently uses Truth Social to condemn the four pending criminal cases against him and the civil lawsuits that have resulted in judgments exceeding $500 million.
Despite the challenges faced by the company, Trump recently hosted a party at his Mar-a-Lago club in Palm Beach, Florida, to celebrate Trump Media. "I think that Truth has become so important. It's strong, it's dedicated," Trump told attendees, according to a report on the RSBN news site. He also emphasized the company's lack of debt and its $200 million in cash, which he described as "very liquid."
