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Trump Media shares plummeted more than 13 per cent on Monday morning after the company filed to register millions of additional shares – marking the latest blow for the struggling stock.
In a filing to the Securities and Exchange Commission (SEC), Trump Media & Technology Group (TMTG) said it was proposing releasing 21.4 million shares of common stock.
Trump Media, the parent company of Truth Social, said the plan – a move that could help the company at a time it is losing money – was issuable “upon the exercise of warrants”, which give investors the ability to buy shares of stock at a certain price in a specific timeframe.
However, issuing new stock can devalue existing shareholders’ stock.
The latest plunge in share price came the same morning Donald Trump headed to Manhattan Criminal Court for the start of his first criminal trial.
Jury selection began on Monday morning in the case where the former president is facing 34 felony counts of falsifying business records over a hush money payment to adult film star Stormy Daniels to silence a story about an alleged affair ahead of the 2016 presidential election.
The former president is the majority stakeholder in Trump Media.
Exercise warrants are a common part of special-purpose acquisition company (SPAC) deals like the one Trump Media took part in when it went public back in March.
Trump Media merged with the shell company Digital World Acquisition Corp (DWAC) to go public on NASDAQ under the ticket “DJT”. On its first day, shares were selling for approximately $58.
But the share value quickly plummeted in the following days. Less than a week later, shares were selling at $48.66.
On Monday, shares were selling for less than half the value of opening day, at just $28.30.
Though the share price fall is not directly related to Mr Trump’s criminal trial, the company did disclose in its latest SEC filing that if Mr Trump becomes less popular or if there are new controversies it could “adversely” affect TMTG’s operations.
Trump Media predicted that it could receive up to a total of $247.1m from the exercise of warrants if the common stock trading price remains over $11.50 per share.
