Stock Market

Trump Media (DJT) Stock Continues to Slip on Dilution Fears

There will be 204.44 million shares of DJT stock outstanding upon the exercise of warrants

Source: T. Schneider / Shutterstock.com

Shares of Trump Media & Technology Group (NASDAQ:DJT) stock are once again in the red, bringing the company’s loss during the past month to over 40%.

CEO Devin Nunes believes that market manipulation, illegal naked short selling and the failure to deliver (FTD) shares have contributed to the decline. In a letter dated June 20 to the Committee on Oversight and Reform and three other committees, the former House of Representatives member wrote:

“Recent data from the Securities and Exchange Commission for May 1-15 reveal a shockingly high amount of FTDs for DJT. Indeed, FTDs exceeded one million shares on seven of the ten trading days covered by the data, and on three of those days—May 2, May 3, and May 6—they exceeded two million shares.”

Nunes also requested the four committees to obtain information from the Options Clearing Corporation (OCC), including if DJT options received postponed settlement treatment.

DJT Stock Falls Amid Dilution Fears, Allegations of Illegal Naked Short Selling

In the letter, Nunes fails to bring up the Securities and Exchange Commission’s (SEC) recent approval of TMTG’s share offering or its financials.

The offering consists of up to 14.37 million shares issuable upon the exercise of warrants, as well as the resale of up to 146.10 million shares from existing shareholders. These warrants carry an exercise price of $11.50. If all of the warrants are exercised, TMTG stands to gain $247.1 million. TMTG will not earn any money from the sale of stock or warrants.

Nunes himself will participate in the resale and plans on offloading his entire stake of 115,000 shares. In addition, CFO and Treasurer Phillip Juhan plans on selling his entire stake of 490,000 shares.

TMTG added that it would use the proceeds from the offering to fund its business plan. However, with more shares on the market upon the completion of the offering, dilution will occur. If all of the warrants are exercised, there will be 204.44 million shares of DJT outstanding.

TMTG is also highly unprofitable and barely makes any money. During the first quarter, revenue tallied in at just $770,500 while the company reported a net loss of $327.7 million.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.  

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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