Trump's Love for Truth Social Hits Shareholders as Stock Price Plunges

Following a sharp drop in share price for Digital World Acquisition Corp. (DWAC), the newly merged company, Trump Media, which was approved in a shareholder vote on Friday, saw a plunge of nearly 14%, sparking concerns about the future value of the company.

Share Price Plummet

On the day of the shareholder approval, DWAC's stock fell to $44.20 per share, from a 52-week high of $58.72 per share as the long-stalled merger seemed more likely to happen. The trading opened Friday morning just ahead of the vote, with shares closing at $36.94 per share and an after-hours recovery to $38.55 per share, still 12.7% lower than the opening price.

Concerns over Revenue and Legal Issues

Concerns have been raised over whether Trump Media & Technology Group (TMTG), which reported losses of nearly $50 million over the first three financial quarters of 2023 and booked less than $3.5 million in revenue, can deliver significant revenue. Additionally, the company's future is clouded by Trump's legal problems, including civil legal judgments topping a half-billion dollars in New York federal and state courts, as well as mounting legal bills from those cases and four criminal prosecutions as he seeks to unseat President Joe Biden in November's election.

Trump's Financial Troubles

In a court filing, Trump's lawyers stated that he does not have the cash to obtain an appeal bond to secure a $454 million fraud judgment. This has stalled the New York Attorney General's Office from collecting the award. Furthermore, Trump's legal issues have heightened concerns that he may seek to sell off his shares early to cover his legal costs, potentially leading to a drop in share prices.

Trading on NASDAQ

Trump Media is set to begin trading on the NASDAQ stock market as soon as next week, using the ticker symbol DJT, the same symbol used for Trump's prior publicly traded company, Trump Hotels & Casino Resorts, which filed for bankruptcy protection in 2004.

Restrictions on Share Sales

Under the terms of the merger, Trump will be prevented from selling shares in the company for six months. However, the new board of directors, which will include his son, Donald Trump Jr., and other close allies, could vote to lift that restriction, allowing him to sell shares earlier to cover his legal costs, which could potentially lead to further decline in share prices.