Why has Trump Media taken a 69% plunge

Donald Trump’s media company, Trump Media & Technology Group (DJT), showed promise after its March listing. However, in September, the shares have cut 69% of the company’s value.

As per a report by Bloomberg, the end of the company’s lockup period from its blank-check deal on September 19 can further push down the price.

DJT stocks lose 69%

The stock of Donald Trump’s media company has declined as the lockup period from its blank-check deal is about to end. Trump Media & Technology (DJT) Group Corp., which owns Truth Social, was listed in March 2024. And when any company goes public through blank-check mergers, early investors face a lock-in period. This essentially means that founders and company insiders can sell their shares after this period, potentially increasing the supply of shares in the market. A short buy demand leads to a share price drop. The lock-in period reportedly expires on September 19, which can push the prices down further.

According to Bloomberg, Trump Media’s peak market valuation was in mid-May of around $10 billion. However, there has been a 69% fall since then with the company now valued under $3.4 billion.

Trump’s return to X is a negative for Truth Social

Another reason for the decline could be Trump’s return to X (formerly known as Twitter), as it has diverted attention away from Truth Social. Truth Social has failed to add to the media company’s revenue amid its increasing losses. Meanwhile, Trump’s personal stake is down from $6 billion to $2 billion over the last few months. Negative market sentiments also arise from speculation that Trump will further reduce his stake.

#TrumpMedia

DJT Stock Plumbs New Lows Ahead of Potential Trump Share Sale

Shares of Donald Trump's social-media startup hit their lowest level on Wednesday since the company's public listing, on expectations he might start selling them soon. His stake is worth about $2… pic.twitter.com/CDYYLONNoG

— MrTopStep (@MrTopStep) September 5, 2024

Adding to the company’s struggles, Trump Media reported a 30% drop in Q2 revenue with only $836,900. The company also recorded a $16.4 million loss, slightly cutting back from the $22.8 million loss in the previous year. The company had said that part of this revenue decline was due to changes in its ad sales partnerships.

Meanwhile, political competition seems to be another factor. A YouGov poll shows a tight race between Trump and Vice President Kamala Harris in major swing states. The poll by The Times and SAY24 shows Harris is leading in 4 states like Michigan and Nevada, while Trump maintains a narrow edge in 3.

Polymarket bets are now swinging in Trump’s favor with 53% forecasting him to be the next US president. Trump’s political performance, the media company’s financial outlook, and the former president’s presence on Truth Social play a role in DJT’s valuation. A further market saturation and investor uncertainty can weaken its price even more.