Shares of Trump Media & Technology Group (DJT) took a significant hit earlier this week, plunging more than 10% on Monday, marking their lowest level since the social media company went public in March. This drastic drop follows the expiration of DJT’s lockup period, which officially ended last week. The lockup period prevented stakeholders, including former President Donald Trump, from selling or transferring shares for six months after the company’s public debut. Despite the end of this restriction, Trump has maintained that he has no intention of selling his shares.
The Purpose and Impact of the Lockup Period
The concept of a lockup period serves to protect the stability of a newly public company. When companies first go public, early investors and insiders are typically restricted from selling their shares for a set period, often six months, to avoid flooding the market with an excessive supply of shares, which could drive down the stock price. As detailed by Yahoo Finance’s Ben Werschkul, the primary goal of this period is to give the company enough time to stabilize in the public markets before insiders can begin cashing out.
The expiration of the lockup period often results in increased volatility for a stock, as it opens the door for a large amount of shares to potentially flood the market. Even though Trump has publicly stated that he has no intention of selling his shares, investors were bracing for the possibility that other stakeholders might liquidate their positions. This uncertainty likely contributed to the sharp decline in DJT’s stock price.
Trump’s Stance on Holding His Stake
Former President Trump, who holds approximately 60% of the company, remains firm in his decision to keep his shares. Speaking at a press conference just before the lockup period expired, Trump made it clear that he sees the platform as a key tool for getting his message out. "I have absolutely no intention of selling," Trump remarked. "I love it. I use it as a method of getting out my word." His strong attachment to the platform and personal stake in the company has been a cornerstone of his involvement with Trump Media & Technology Group, which operates the social media platform Truth Social.
Despite Trump’s confidence, he acknowledged that his stake in the company has been "whittled down" in recent months. This admission reflects the broader reality of the stock’s performance, as DJT has experienced significant volatility since its public debut. Shares of the company have dropped by about 20% since the lockup period expired and are now far from their record high of just over $79 per share.
DJT’s Market Performance
At its peak, DJT’s stock surged to impressive levels, giving the company a market capitalization of more than $5 billion. Trump’s personal stake was valued at around $4.5 billion immediately after the company’s public debut. However, the stock’s performance has taken a sharp downturn since then. DJT’s current market cap stands at approximately $2.5 billion, with Trump’s stake now valued at around $1.5 billion—a steep decline from the early days of the company’s public life.
Trump Media went public in late March via a merger with Digital World Acquisition Corp., a special purpose acquisition company (SPAC). The stock’s performance has been closely tied to the news cycle, often experiencing sharp fluctuations in response to political developments and Trump-related headlines. In June, for example, DJT’s stock experienced a brief spike following a debate stumble by then-President Joe Biden during his first 2024 debate with Trump. However, this gain was short-lived, as shares quickly fell back down. The stock faced additional pressure when Biden later withdrew from the presidential race.
External Factors and Legal Challenges
Since Biden’s withdrawal, DJT’s stock has continued to face headwinds, particularly as Vice President Kamala Harris, now the Democratic presidential nominee, has been tracking ahead of Trump in the latest polling. The political uncertainty surrounding the 2024 election, combined with Trump’s ongoing legal battles, has added to the volatility of DJT’s stock.
In May, Trump was found guilty on 34 counts of falsifying business records related to his 2016 presidential campaign. This verdict sent shockwaves through the market, causing DJT’s stock to drop by 5% the day after the conviction. While Trump’s legal team has filed appeals and sentencing has been delayed until November, the legal overhang remains a significant risk factor for investors.
As of now, DJT’s stock has fallen by about 65% since the company’s public debut, a steep decline that reflects both the broader challenges facing the company and the personal controversies surrounding its founder.
The Birth of Truth Social and Its Challenges
Trump founded Truth Social in the wake of his ban from major social media platforms like Facebook (now Meta) and Twitter (now X) following the Capitol riots on January 6, 2021. Truth Social was created to give Trump and his followers a platform to express themselves without the restrictions imposed by mainstream social media companies. However, the platform has faced its own set of challenges since its launch.
Truth Social has struggled to gain traction with mainstream users, and its user base has remained relatively small compared to giants like Facebook and X. While the platform initially attracted a surge of users, growth has since stagnated, and the company has struggled to monetize the platform effectively. Despite these challenges, Trump has remained active on Truth Social, regularly using it to communicate with his supporters.
In mid-August, Trump made his highly anticipated return to X after a year-long hiatus. His return to the platform was seen as a significant moment, as X (formerly Twitter) had been one of Trump’s primary tools for communication during his presidency. However, his renewed presence on X raises questions about the future of Truth Social, particularly if Trump’s attention shifts back to the larger, more established platform.
The Road Ahead for DJT
Looking forward, DJT faces a challenging road as it tries to regain its footing in the public markets. The expiration of the lockup period, combined with Trump’s ongoing legal battles and the political uncertainty surrounding the 2024 election, has created a perfect storm of volatility for the stock. Investors will be closely watching how the company navigates these headwinds and whether it can stabilize its stock price in the coming months.
Despite the challenges, Trump remains confident in the future of his media company. His personal attachment to the platform and his large ownership stake suggest that he will continue to be a driving force behind DJT’s strategy and growth. However, the company will need to address its user growth challenges, monetize its platform more effectively, and navigate the broader political and legal landscape if it hopes to reverse its current trajectory.
Economic and Market Implications
The sharp decline in DJT’s stock price has broader implications for investors, particularly those who invested in the company during its early days. SPAC deals, like the one that brought DJT public, have been under increased scrutiny in recent years as many of these companies have struggled to deliver on their early promises. DJT’s struggles are emblematic of the broader challenges facing SPAC-backed companies, many of which have seen their stock prices fall significantly since going public.
For the broader market, the volatility surrounding DJT serves as a reminder of the risks associated with investing in highly politicized companies. Political developments, legal battles, and the news cycle can have an outsized impact on these stocks, creating a level of uncertainty that can be difficult for investors to navigate. As the 2024 election approaches, DJT’s stock will likely continue to be influenced by political developments, making it a risky but potentially rewarding investment for those willing to take the gamble.
Conclusion
In summary, DJT’s stock has experienced a significant decline following the expiration of its lockup period, dropping to new lows amid political uncertainty and legal challenges. While Trump remains committed to holding his shares and using the platform to communicate with his supporters, the company faces a challenging road ahead as it seeks to stabilize its stock price and address its growth and monetization challenges. Investors will be closely watching how the company navigates the political and legal landscape in the coming months, as DJT’s performance will likely continue to be tied to the news cycle and developments surrounding its founder.