HomeBusinessTrump's Truth Social suffers a $700 million slump after issuing new shares

Trump’s Truth Social suffers a $700 million slump after issuing new shares

Donald Trump attended court on Monday for the first day of his trial over alleged hush money payments – Jabin Botsford/via REUTERS

Donald Trump’s social media app took a $700 million (£562 million) hit on Monday after its parent company issued new shares in an attempt to raise money.

Shares of Trump Media & Technology Group (TMTG), the parent company of Truth Social, fell more than 15% after it announced plans to offer up to 21.5 million new shares.

The move, which threatens to devalue existing shareholder interests, has wiped out more than $700 million from the company’s market value.

TMTG enjoyed a surge in value after listing in New York via blank check last month, with Trump’s followers buying shares as a way to support his 2024 re-election campaign.

But its market value has since fallen by more than $5 billion due to concerns about the political risks associated with the app’s founder, who founded Truth Social after being banned from Twitter in the wake of the attack on the Capitol from January 6, 2021.

See also  Stocks to watch on Friday: TSM, Nvidia, AMD

The latest approval rating hit came as Trump appeared in court on the first day of his trial over claims that he tried to cover up a $130,000 hush money payment to porn star Stormy Daniels ahead of the 2016 election.

It is the first time a US president has faced a criminal trial and is one of four criminal cases Trump faces as he campaigns to return to the White House.

In a filing on Monday, TMTG acknowledged that Mr. Trump faced “numerous legal proceedings” and that a negative outcome in one or more of these cases could have negative consequences for the company.

Investors have also balked at Truth Social’s steep losses. Earlier this month, TMTG revealed it lost $58 million last year on revenue of just $4.1 million.

The company also warned of “substantial doubt that TMTG will have sufficient resources to meet its obligations as they fall due.”

The issuance of new shares could help raise more money at a critical time for Trump, who is facing mounting legal and financial problems.

See also  The Average Retirement Age in the US: Where Do You Stack?

However, it is likely that the former president’s personal stake in the company will be diluted from the current level of approximately 57%.

Trump’s paper windfall from TMTG has fallen from more than $5 billion, although he could still be eligible for more than $1 billion. Under the terms of the listing, he cannot sell shares until September.

In addition to the criminal cases, the former president is also involved in a legal dispute with two co-founders of TMTG.

Andy Litinsky and Wes Moss, former contestants on Trump’s reality show The Apprentice, have accused him of trying to dilute their stakes in the company.

TMTG has filed its own lawsuit against the couple in response, accusing them of mismanaging the company and claiming they should lose their assets.

Broaden your horizons with award-winning British journalism. Try The Telegraph free for 3 months with unlimited access to our award-winning website, exclusive app, money-saving offers and more.

See also  The S&P 500 falls below 5,100 as Big Tech leads the decline
- Advertisement -


Please enter your comment!
Please enter your name here

Most Popular

Recent Comments