Shares of Trump Media & Technology Group, the parent company of Donald Trump’s Truth Social platform, plummeted Monday after the struggling business filed to potentially increase the number of shares for sale.
The company’s stock tanked 18%, decreasing its value by hundreds of millions of dollars, after it filed a preliminary prospectus with the Securities and Exchange Commission detailing plans to offer more than 20 million additional shares. The move appeared to spook investors, worrying them that a massive influx of new shares could deplete the stock price.
Trump Media’s stock has been in a downward spiral since the company went public last month following a merger with a shell company. It debuted on the market at $70.90 a share and dropped to $27 on Monday. As a result, its market value has declined from around $8 billion on its first day of trading to $3.7 billion on Monday.
Trump’s company revealed in an SEC filing two weeks ago that it lost more than $58 million and generated only $4.1 million in revenue last year. As part of the filing, an auditor warned those figures raise “a substantial doubt” about whether Trump Media can “continue as a going concern.” In other words, Truth Social may have to follow in the footsteps of Parler ― another ill-fated conservative social network ― and go out of business. Shares dropped more than 15% that day.
It’s hard to overstate how troubled Truth Social’s financial situation is. For context, Twitter (now known as X) generated more than $660 million in revenue in the year before it went public and $5 billion in the year before it went private under the new ownership of Elon Musk.
Trump, the presumptive GOP nominee for president, launched the company in 2022 after Twitter and Facebook both banned him. Though his suspension on those websites has been lifted, Trump nearly exclusively posts on Truth Social.
His presence on the platform has not proven to be a big draw. It only had about 494,000 monthly active users in February, according to data obtained by CNN. Twitter’s active user base is about 150 times bigger.