Shares of former President Donald J. Trump’s social media company slumped more than 20 percent on Monday, as the fervor around the company’s debut on public markets last week appeared to subside.
The sell-off cut the market value of Trump Media & Technology Group, which trades under the ticker “DJT,” by some $2 billion, to about $6.5 billion.
The value of Mr. Trump’s majority stake in the company fell to about $3.7 billion, from over $6 billion at its peak last week.
Still, shares of Trump Media were higher than they were immediately before the firm merged with a public shell company on Tuesday and began trading on the Nasdaq. Strong support for the merged company after it began trading pushed its market value as high as $10 billion at one point last week.
That raised eyebrows across Wall Street, given the relatively small size of Trump Media’s business. A filing on Monday showed that the company generated just $750,000 in revenue in the fourth quarter last year, bringing its full-year total to $4.1 million. Trump Media recorded a $58 million loss in 2023. It got more than $300 million in cash as part of its merger with the shell company.
All the company’s revenues come from advertising on Truth Social, the digital platform that has become Mr. Trump’s main outlet for reaching his supporters and blasting his critics, political opponents and other perceived enemies, including the prosecutors and judges involved in his criminal and civil cases.
Over the weekend, Mr. Trump shared a video on the platform that had an image of a decal on the back of a truck of a hogtied President Biden.
Trump Media stands out on Wall Street as the market’s most “shorted” stock — shares that investors bet will fall. Derivatives linked to the stock, which allow investors to speculate on its future price, have also been popular, suggesting that traders are braced for more big price swings — both higher and lower — in the weeks to come.
It is not uncommon for so-called meme stocks, which are heavily influenced by momentum and the enthusiasm of masses of small shareholders, to be extremely volatile, prone to sudden and steep increases and declines.
One question surrounding Trump Media is whether the company’s board will relax a provision that prohibited Mr. Trump from selling stock or using his shares as collateral for a loan for six months after the shares began trading. But in Monday’s filing, the company said the board made no changes in the lockup provision.
That makes it unlikely Mr. Trump will rely on his stake of about 60 percent in Trump Media to help pay for the posting of a $175 million bond in connection with his appeal of a civil fraud penalty imposed by a New York state judge.
Mr. Trump, the presumptive Republican nominee for president, is not a member of the company’s seven-member board. But because of his large stake, Trump Media is considered a “controlled company,” where more than 50 percent “of the voting power for the election of directors is held by an individual.”
Trump Media’s board is already under Mr. Trump’s sway, as its members include his eldest son and three former members of his administration. Mr. Trump, who served as chairman of Trump Media before the merger with the shell company, is not an officer or director of the company now.
After the merger, Trump Media adopted a code of ethics that requires “covered persons” — board members and employees — to engage in political activities only as private citizens. If these people engaged in political activities, they “must make clear that their views and actions are their own, and not those of the company,” according to the code.
