Trump Media and Technology Group, the company that owns Truth Social, announced the issuance of 21.5 million new shares on Monday, causing the market to sell off many of its shares en masse as the stock dropped over 15%.
Former President Donald Trump, the majority share owner of TMTG, lost about $470 million in net worth after Monday’s drop, per CNN. The decline started on April 2, when the stock traded at $51.60. It has since nearly halved its value.
The new stock issuance will devalue Trump’s and others’ shares in the company but will allow the company to raise more cash right now. Matthew Tuttle, CEO of Tuttle Capital Management, said the company would be “stupid” not to sell more stock, even amid the stock plunge.
TMTG will not be able to sell those new stocks immediately because they will have to jump through other hoops, including a six-month waiting period, in order to get the move finalized.
Trump’s stock shot as high as $71.93 on March 27 as investors celebrated the company’s merger with Digital World Acquisition Corp., a “blank-check company” or type of business that raises cash to find other companies to merge with.
Trump Media and Technology Group has long been considered overvalued due to its lack of revenue. The company brought in about $750,000 in the last quarter of 2023, paling in comparison to Meta’s $40 billion earnings in the same period. TMTG brought in $4.1 million in 2023 and lost nearly $58.2 million.
Fox News host Maria Bartiromo recently questioned TMTG CEO Devin Nunes, a former House Republican from California, on the company’s market downturn.
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“If you actually look at the cost, we built Truth Social … for a fraction of what many of these Big Tech dinosaur companies were built for,” Nunes said.
“So even if you take the ridiculous cost that it took us to get to this point, we are well positioned because we have no debt,” he added. “We’re coming out of this with no debt, a platform that works really, really well that communicates to millions of people. And then we have $200 million in the bank.”
