Trump Media's stock price plummeted after former President Donald J. Trump, the company's largest investor and a major user of its Truth social platform, was convicted of 34 felony counts of falsifying business records to cover up a sex scandal.
Trump Media shares fell about 5% in premarket trading on Friday. The shares began to fall immediately after the verdict in Trump's Manhattan trial was announced on Thursday after the stock market closed. At one point, the shares were down as much as 14%.
Such big moves are not unusual as the company's stock price is generally volatile, especially immediately after the official close of regular trading when trading volume is low and price fluctuations can be more pronounced. Still, because the stock price movements were closely tied to news of the ruling, it was one of the few ways investors could react to the trial in real time.
Trump Media remains highly valued relative to the size of its business. Even after the recent share price decline, the company has a market capitalization of more than $8.5 billion. Trump owns about two-thirds of the company, worth about $5.5 billion. That stock has been his main asset since Trump Media went public in March, but he cannot sell it or borrow against it until September.
Trump Media reported significant losses and negligible revenue from advertising on Truth Social. In the first quarter of this year, the company reported an operating loss of $12.1 million on revenue of $770,000, a 30 percent decrease in revenue from the same period last year.
Many users came to his defence on Truth Social, which has become Mr Trump's personal megaphone for lashing out at judges, prosecutors and critics. The roughly 7 million registered users on Truth Social are some of Mr Trump's most ardent supporters, and many of them are also investors in Trump Media, partly explaining why the company's stock has soared.
Trending topics on Truth Social on Friday morning included “Trump2024,” “MAGA” and “IStandwithTrump.”
Some Truth Social users have posted images of the American flag upside down, a possible reference to the controversy surrounding conservative Supreme Court Justice Samuel A. Alito Jr. The upside-down flag is seen as a symbol of anguish, and those who deny Trump's 2020 election loss have adopted it as a symbol of their beliefs. The New York Times reported that Alito's wife had hung an upside-down American flag outside one of their homes in January 2021.
Trump's campaign immediately began fundraising following his conviction, with some of its ads running on Truth Social, including some that described Trump as a “political prisoner.”
Trump Media's regulatory filings have long warned investors about the risk of Trump being convicted in one of four criminal cases he faces in state and federal courts. “An unfavorable outcome in one or more of the ongoing litigation involving President Donald J. Trump could have an adverse effect on the company and the Truth Social Platform,” the latest filing read.
