Trump Media Stock Swings After Guilty Verdict
Shares of Trump Media whipsawed after former President Donald J. Trump, the company’s largest investor and primary user of its Truth Social platform, was found guilty of 34 felony counts of falsifying business records to cover up a sex scandal.
Trump Media’s stock began falling immediately after the verdict in Mr. Trump’s trial in Manhattan was announced on Thursday, which came after the stock market had closed. Shares sank by as much as 14 percent at one point before steadily recovering to trade up by about 1 percent in premarket trading on Friday.
The company’s stock is typically volatile, so such large moves are not unusual, especially after the official close of regular trading, when low trading volumes can accentuate price swings. And much of the stock available to trade is owned by individual investors, many of them fans of the former president. Still, the shares are one of the few ways in which investors can react to the trial in real time, with initial price moves closely tied to news of the verdict.
Trump Media remains richly valued relative to the size of its business. Even after its recent decline, the company is worth more than $9 billion in market value. Mr. Trump owns about two-thirds of the company’s shares, a stake worth about $6 billion. The stock has become his main source of wealth since Trump Media make its market debut in March, but he cannot sell or borrow against the shares until September.
Trump Media has reported steep losses and modest revenue, which derives from advertising on Truth Social. In the first quarter of this year, the company recorded an operating loss of $12.1 million and $770,000 in revenue, a 30 percent drop in sales from the same period a year ago.
On Truth Social, which has become Mr. Trump’s personal megaphone to rail against judges, prosecutors and critics, many users rallied to his defense. The roughly seven million registered users of Truth Social are some of Mr. Trump’s most ardent supporters and many are also investors in Trump Media, which partly explains the sky-high valuation of the company’s shares.