Trump Media Explores Potential Truth Social Spinoff Amid Stock Volatility
Trump Media & Technology Group (TMTG) is considering a major change. The company might spin off its Truth Social platform. This could make Truth Social a separate publicly traded entity. TMTG currently owns the social media site.
TMTG merged with Digital World Acquisition Corp. (DWAC) in March. Following the merger, shares began trading under the ticker “DJT.” This event initially boosted the company’s market value. However, share prices have since seen significant declines.
TMTG’s Market Performance
Initially, TMTG’s stock soared after its market debut. Shares traded around $79. They reached an intraday high of $79.38. This surge temporarily increased Donald Trump’s estimated net worth. However, the stock quickly lost much of its value. Prices fell below $30 per share by early April.
Analysts note the company’s valuation remains high. Despite this, TMTG reported substantial losses last year. It also generates limited revenue. Such metrics raise questions about the stock’s long-term stability. Donald Trump, a majority shareholder, cannot sell his shares for six months. This is due to a lock-up agreement.
Warrant Conversions and Cash Infusion
DWAC warrants recently expired on April 11. These warrants allowed holders to buy DWAC shares at a set price. Many warrant holders converted them into TMTG shares. This action significantly increased TMTG’s cash reserves. The company received millions of dollars from these conversions.
Specifically, warrant holders exercised 14.8 million warrants. Each warrant converted into one share of TMTG stock. This process added about $136.5 million to TMTG’s balance sheet. However, it also increased the total number of outstanding shares. This could lead to dilution for existing shareholders.
The Spinoff Prospect for Truth Social
Devin Nunes, TMTG’s CEO, recently hinted at a potential spinoff. He suggested that Truth Social could become its own public company. This move aligns with plans outlined in the original SPAC merger terms. The goal is to maximize shareholder value.
A spinoff would create two distinct publicly traded companies. One would focus on Truth Social. The other would manage other TMTG ventures. This strategy aims to unlock value for investors. It would also provide new capital opportunities for both entities. Details on a potential timeline or structure remain unclear.
Future Financial Outlook
TMTG faces ongoing financial hurdles. It settled a previous lawsuit for $1 million. The company also needs additional capital for growth. Its operations have historically relied on a promissory note from Donald Trump. The potential Truth Social spinoff could offer a new path for financial stability.
Meanwhile, the market will closely watch TMTG’s performance. Investors seek clear strategies. They want to see how the company plans to sustain its valuation. The future of Trump Media and Truth Social remains a key topic in business news.
