M.P. CORRESPONDENT / NEW DELHI
Shares of Donald Trump's social
media company fell by more than 20% on Monday, less than a week after it began
publicly trading under the DJT ticker.
The drop comes after Trump Media & Technology Group
reported it had lost nearly $60m (£48m) last year while only bringing in around
$4m in revenue.
The price plunge caused the former president's net worth
to shrink by $1bn, according to Bloomberg.
Shares had surged last week, giving the company an $11bn
valuation.
But experts warned the stock was bound to tumble, as its
main product - Truth Social - loses users and burns cash.
The price spike drew comparisons to the pandemic-era
"meme stock" mania, when the share prices of companies like GameStop
and AMC soared even though basic parts of their businesses, such as revenue,
were weak.
Meme stocks are ones that gain sudden popularity on
social media, sparking price rises as online investors rush to buy.
On Monday, shares of Trump Media - which makes its money exclusively
through advertising on Truth Social - fell $13.30 to $48.66. But they are still
up nearly 200% so far this year.
The
surge has been driven by small-time investors, at least some of whom appear to
be showing support for the former president as his legal troubles, and the
bills that accompany them, pile up.
Mr Trump holds a nearly 60% ownership stake in the
company and stands to earn a billion-dollar windfall when he cashes out his
shares - though he is legally barred from doing so for another six months
unless the company's board grants him a waiver.
But these investors are making a bet on a company that,
in a special filing on Monday, told the Securities and
Exchange Commission (SEC) it "expects to continue to incur
operating losses and negative cash flows from operating activities for the
foreseeable future".
According to the financial filing, Trump Media paid
about $40m in interest expenses and $16m in operating losses in 2023.
The company said its management had "substantial
doubt" that it "will have sufficient funds to meet its liabilities as
they fall due".
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