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Shares of Trump Media plunged on Thursday after a decision by the Securities and Exchange Commission (SEC) cleared the way for more shares to be sold.
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The owner of the Truth Social app announced that the SEC declared Trump Media’s registration statement effective after the bell on Tuesday, opening the door for several investors to exercise warrants.
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The SEC’s action could mean more than 14 million new Trump Media shares hit the market as investors sell through the warrants.
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Trump Media CEO Devin Nunes said the SEC’s statement was “another milestone” for the company, saying it believes it is well-positioned to expand.
Trump Media & Technology Group (DJT) or TMTG shares plunged more than 14% on Thursday after the Securities and Exchange Commission (SEC) declared the company’s registration statement effective — which could flood the market with millions more Trump Media shares.
Former President Donald Trump’s media company announced the development after the bell on Tuesday, with the stock falling in extended trading as the SEC’s decision means more than 14 million shares could hit the market if some investors would exercise their warrants and lose their shares. shares, as set out in the company’s prospectus. With markets closed on Wednesday for the Juneteenth holiday, Thursday was the first full day of trading after the announcement.
Exercised warrants could net TMTG nearly $250 million
The company said in Tuesday’s statement that any warrants exercised for cash could generate up to $247 million in proceeds, along with an additional $40 million that has become unrestricted as a result of the registration statement becoming effective.
CEO Devin Nunes called the announcement “another milestone” for TMTG and Truth Social, the social media platform that TMTG operates, and said the company expects to be “well positioned” to tackle new growth areas such as expanding Truth Social and pursuing streaming television. Product.
Trump Media stock has experienced significant volatility since its merger with Digital World Acquisition Corp. and became a publicly traded company in March.
Thursday’s losses add to the recent volatility
A number of recent events have caused significant swings in the company’s stock, from the company’s decision to inform Nasdaq executives that it believed there was naked short selling of its stock, to the filing of intentions to to issue millions of new shares and earnings reports that revealed significant losses. .
The stock has fallen in all but two trading sessions since Trump was convicted in a New York court on May 31 on 34 counts of falsifying company records.
Shares of Trump Media fell 14.6% to close Thursday at $26.75, the lowest in more than two months.
Read the original article on Investopedia.
