Trump Media Shares Buckle Over Secondary Offering Plans

Shares in Donald Trump’s social media company Trump Media fell sharply on Monday after the firm said it would issue millions more shares in a secondary offering.

The company has seen its stock price drop about 60 percent from its closing high of $66.22 (£53) on 27 March, two days after it went public via a merger with shell company Digital World Acquisition Corp.

In a Monday regulatory filing Trump Media said it plans to issue roughly 21.5 million additional shares in connection with warrants, which give the owner a right to buy a share at a certain price.

The price of the company’s shares dropped on expectation that these warrants would be converted to shares and the shares immediately sold.

Secondary offering

The filing also sought to register 146.1 million shares held by some stockholders for resale, including all of Trump’s own shares.

Those shares cannot be sold immediately, as they are subject to restrictions such as lock-up periods, but the filing moves a sale one step closer.

An en masse sale of tens of millions of shares would drive the stock price lower.

Trump himself is restricted from selling his shares until about September.

The share price of Trump Media has been driven up largely by smaller traders who are Trump fans, analysts have said.

Loss-making platform

The stock’s popularity is in contrast to its financial situation, with revenues of only $4.1m in 2023 on losses of $58m.

The company’s revenues largely come from Truth Social, Trump’s social media platform, which had estimated visits of only 7.7 million in March.

Issuing millions of new shares in a secondary offering, as Trump Media has said it plans to do, is a way of raising new funds to keep the company afloat.

As such it is a necessary move that the company is undertaking even though it may anger investors.

Raising funds

Trump himself currently owns about 57 percent of the firm, but this would drop to just under half following the secondary offering.

The former president’s stake was valued at some $5.2bn at the stock’s closing high, but that has now dropped to around $2bn, including a $400m hit from Monday’s decline.