DJT Stock: 21 Million Reasons Trump Media Shares Are Struggling to Stay Afloat


  • Trump Media (DJT) filed to sell an additional 21 million shares of stock.
  • There are also warrants to be exercised, including a 36 million share earnout for the former president.
  • The stock watering hearkens back to an earlier time.
DJT stock - DJT Stock: 21 Million Reasons Trump Media Shares Are Struggling to Stay Afloat

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Trump Media & Technology (NASDAQ:DJT) filed a 21 million-share secondary offering, which caused DJT stock to fall another 18%.

A secondary offering of stock has the effect of watering down the shares of existing shareholders. The company currently has 136.7 million shares outstanding.

DJT opened for trade this morning at $27 per share, a market capitalization of about $3.8 billion.

An Old Story

Since the 19th century, corporations have sold new shares to reduce the value of a potential dissenter’s stake.

As Digital World Acquisition, a special purpose acquisition company (SPAC) that traded as DWAC, Trump Media has been actively traded for years. Other companies tied to the former president’s political movement, like Phunware (NASDAQ:PHUN) and Rumble (NASDAQ:RUM), also had brief run-ups before falling. Trump Media rose sharply in its first days after de-SPACing last month but has since fallen steadily.

The most recent example of this “stock watering” came in 1956 from MinuteMaid, in which singer Bing Crosby then held a stake. (Minute Maid is now part of The Coca-Cola Co. (NYSE:KO)) Trump Media is tied to presidential candidate Donald Trump and has few assets beyond his name.

The secondary offering is just one part of the company’s most recent S-1 filing with the SEC. It notes that over 146 million additional shares could be sold once warrants are exercised. The warrants trade separately as Digital World Acquisition (NASDAQ:DJTWW) and are currently worth $11.50 each. Trump also has 36 million shares given as an “earnout” bonus based on DJT’s stock price. Once his warrants are exercised, Trump could have a 65% share of the company’s stock.

Trump Media would not profit from the shares being sold by investors. It could receive cash from the exercise of the warrants, amounting to tens of millions of dollars.

DJT Stock: What Happens Next?

DJT stock could rise near the end of its lock-up period, allowing Trump to exercise his warrants at a profit. Small investors looking to get out might sell into that strength.

On the date of publication, Dana Blankenhorn 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 Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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