Trump’s Truth Social suffers 0m slump after issuing new shares

Trump’s Truth Social suffers $700m slump after issuing new shares

Donald Trump attended court on Monday for the first day of his trial over alleged hush money payments – Jabin Botsford/via REUTERS

Donald Trump’s social media app suffered a $700m (£562m) hit on Monday after its parent company issued new shares in a bid to raise cash.

Shares in Trump Media & Technology Group (TMTG), the parent company of Truth Social, tumbled more than 15pc after it announced plans to offer up to 21.5m new shares.

The move, which threatens to devalue existing shareholders’ stakes, wiped more than $700m off the company’s market value.

TMTG enjoyed a surge in its value after listing in New York via a blank-cheque deal last month, with Mr Trump’s followers snapping up shares as a way of supporting his 2024 re-election campaign.

But its market value has since tumbled by more than $5bn amid concerns about the political risks linked to the app’s founder, who set up Truth Social after being banned from Twitter in the wake of the January 6 2021, attack on the Capitol.

The latest valuation hit came as Mr Trump attended court for the first day of his trial over claims he attempted to cover up a $130,000 hush-money payment to porn star Stormy Daniels ahead of the 2016 election.

It is the first time a US president has faced a criminal trial and is one of four criminal cases Mr Trump is facing as he campaigns to return to the White House.

In a filing on Monday, TMTG acknowledged that Mr Trump was facing “numerous legal proceedings” and that a negative outcome in one or more of these cases could adversely affect the company.

Investors have also baulked at Truth Social’s hefty losses. Earlier this month, TMTG revealed it lost $58m last year on revenues of just $4.1m.

The company also warned of a “substantial doubt that TMTG will have sufficient funds to meet its liabilities as they fall due”.

The issuance of new shares could help to raise more cash at a critical time for Mr Trump, who is facing mounting legal and financial difficulties.

However, it is likely to dilute the former president’s personal holding in the company from its current level of roughly 57pc.

Mr Trump’s paper windfall from TMTG has dropped from more than $5bn, though he could still be in line for more than $1bn. Under the terms of the listing, he is unable to sell any shares until September.

In addition to the criminal cases, the former president is also embroiled in a legal dispute with two TMTG co-founders.

Andy Litinsky and Wes Moss, former contestants on Mr Trump’s reality show The Apprentice, have accused him of trying to dilute their stakes in the company.

TMTG has filed its own lawsuit against the pair in response, accusing them of mismanaging the company and arguing they should lose their holdings.

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