Investors in Trump Media are facing a slew of negative issues that are causing turmoil within the company. Insider infighting over stockholdings, competing insider shareholder lawsuits, and now first insiders wanting to sell are just a few of the destructive issues at play. The CEO’s feeble responses in a recent Fox Business News interview have done little to reassure investors. Additionally, there is a still-open million-share spigot from convertible securities and contracts that are converting, as well as a highly diluting 40 million share issuance if the stock can remain above $17.50 for 20 of 30 days.
As a result of these issues, there is an emotional rout happening within Trump Media. This cascade of negative events is prompting a mass shareholder exodus. It is important to note that Donald Trump, as the controlling shareholder, has the power to ask his selected board members for permission to sell before the normal 6-month waiting period. With the stock teetering on the brink and key share price breakdown below the $35 barrier, it is imperative for investors to protect their capital by selling now to avoid further losses.
The stock in Trump Media is significantly overpriced, with a book value under $2 and a price to sales ratio of over 25x. The large negative profit margin and negative price/earnings ratio only add to the already bleak financial picture. The influx of new shares will only serve to worsen the fundamental outlook for the company. Given these factors, it is crucial for investors to act swiftly and beat the coming sellers to the exit to minimize their losses.
When the first SEC-required quarterly report for Trump Media is released, the full extent of the company’s financial troubles will be revealed. At that time, Wall Street analysts will also offer their views, likely leading to further downward pressure on the stock. The inevitable fallout from these disclosures will mark the final shift from rhetoric to reality for investors in Trump Media. Overall, the current situation presents a clear warning sign to investors, urging them to take decisive action to protect their investments before it’s too late.
