Trump’s media stocks fluctuate after conviction

Shares of Trump Media & Technology Group collapsed after former President Donald J. Trump, the company’s largest investor and primary user of its Truth Social platform, was convicted on 34 counts of falsification of business records to cover up a sex scandal.

Shares of Trump Media began to fall immediately after the verdict. Trump’s trial in Manhattan was announced Thursday, after the stock market closed. Shares fell as much as 14 percent at one point before gradually recovering to trade up 5 percent in premarket trading Friday.

The company’s shares are generally volatile, so such large moves are not unusual, particularly after the official close of regular trading, when low trading volumes can accentuate price swings. And much of the stock available for trading is owned by individual investors, many of whom are fans of the former president. Still, stocks are one of the few ways investors can react to the trial in real time, with initial price movements closely tied to the announcement of the verdict.

Trump Media remains highly valued relative to the size of its business. Even after its recent decline, the company’s market value exceeds $9 billion. Mr. Trump owns about two-thirds of the company’s stock, a stake worth about $6 billion. Stocks have become his main source of wealth since Trump Media debuted in the market in March, but he can’t sell or borrow against the stocks until September.

Trump Media reported significant losses and modest revenue from advertising on Truth Social. In the first quarter of this year, the company recorded an operating loss of $12.1 million and revenue of $770,000, a 30% drop in sales compared to the same period of the year. ‘last year.

On Truth Social, which has become Mr. Trump’s personal megaphone to denounce judges, prosecutors and critics, many users rallied to his defense. Truth Social’s approximately seven million registered users are among Mr. Trump’s most ardent supporters and many of them are also investors in Trump Media, which partly explains the sky-high valuation of the company’s stock .

Friday morning. Some of the trending discussion topics on Truth Social were: “Trump2024,” “MAGA,” and “IStandwithTrump.”

Some Truth Social users posted posts with an upside-down American flag, a possible reference to the controversy surrounding conservative Supreme Court Justice Samuel A. Alito Jr. An upside-down flag is recognized as a sign of distress and some deniers of Mr. Trump’s electoral defeat in 2020 had adopted him as a symbol of their belief. The New York Times reported that Mr. Alito’s wife flew an upside-down American flag in front of one of their homes in January 2021.

Mr. Trump’s presidential campaign immediately began raising money from the guilty verdict and some of those ads appeared on Truth Social. Many have described Mr. Trump as a “political prisoner.”

Regulatory filings by Trump Media have long warned investors of the risk that Mr. Trump was convicted in one of four criminal cases filed in his state and federal courts. A recent filing stated that “an adverse outcome in one or more of the ongoing legal proceedings in which President Donald J. Trump is involved could have a negative impact” on the Truth Social company and platform.

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