Trump Media stock was down by double digits in early trading hours on April 15, as the company wants to issue millions more shares.
On April 12, Money.it published an article on Trump Media, which offered two views of the future of the stock. One, contrarian, called for would-be buyers to consider what could happen to the stock if Donald Trump became President of the United States again. The mainstream view was called. “Get out now”. As of April 15, in mid-day trading, the “Get out now” view is favored, and apparently, for the reasons mentioned on the 12th.
"Get out now" recap
On the 12th, we wrote that,
“Along with shareholder disarray, the risk of a serious stock dilution comes from not one but two directions. First, there is a million-share conversion of convertible securities and contracts that is ongoing. Then, there is a ‘bonus’ share issuance totaling 40 million shares if the stock stays above $17.50 for 20 of 30 days.”
The first seems to be coming to fruition already. Trump Media filed with the SEC on the morning of April 15 a plan that would offer over 21.4 million shares of common stock, issuable “upon the exercise of warrants”. These stock warrants enable the holder to buy shares at a set price within a specified time frame. At the time of writing, such warrants for the DJT stock (under DJTWW on the NASDAQ) are priced at under $14.00 each.
Gray zones...
There are two points that have not caught much attention, and both are matters of record keeping. First, the company will not be using many industry standard KPIs to determine how it is performing. In the SEC filing, the company claims that paying attention to such things will take focus away from building a long-term vision. KPIs such as “signups, average revenue per user, ad impressions and pricing, or active user accounts including monthly and daily active users” are mentioned in the filing as having no relevance to the project. However, the company does recognize that it might make it harder or less interesting to compare Social Truth with other social media platforms.
The other record keeping issue is that of the company’s financials. Material irregularities have been found and are being attended to, according to the writers of the filing, but more could be found, they admit.
At the time of writing, Trump Media & Technology Group Corp was trading at $26.87, down from $28.80 at the opening and from $32.00 at Friday’s close. We make no predictions as to the stock’s next moves.
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