Donald Trump’s media company had a steep drop in its stock value, plunging 21% on Monday after disclosing significant losses and projecting future financial difficulties.
Trump Media & Technology Group’s investors felt differently when the merger agreement was finalized, despite the company announcing a $58 million loss.
When the company’s stock made its first public offering on March 26, it performed rather well, mostly thanks to the backing of individual investors, including Trump fans. However, the share value saw a notable downward trend following the startling announcement on Monday. After closing at almost $58 per share, the stock screamed $13.30, or a 21% decline, and was now trading at $48.66.
According to analyst Ross Benes, the decline was caused by investors losing interest in Truth Social and overrating the company with no obvious primary path for profit.
While Trump’s huge shareholding—about 78.75 million shares—may have benefited greatly from a potential gain, the present selling-off is estimated to be worth around $3.8 billion. However, the company, which is valued at over $6 billion in the US market, faces competition from established social media sites like Instagram and Twitter.
According to analyst Michael Ashley Schulman, despite the company’s initial popularity, it lacks the necessary elements to rank first on social media. Similar to this, short sellers who profited from Trump Media’s errors had the chance to recover their losses and profit from the stock’s decline.
The company’s earnings, which were recently revealed to be $4.13 million in 2023, are much less than those of major players in the market like Reddit, which highlights the company’s financial difficulties and bleak future.