Shares of Trump Media plummeted after former President Donald J. Trump, the company’s largest investor and top user of its Truth Social platform, was found guilty of 34 felony counts of falsifying business records to cover up a sex scandal.
Shares of Trump Media fell about 5 percent in premarket trading on Friday. Stocks began falling immediately after the verdict in Trump’s trial in Manhattan was announced Thursday, which came after the stock market closed. Shares sank as much as 14 percent at one point.
The company’s shares are typically volatile, so such large moves are not unusual, especially after the official close of regular trading, when low trading volumes can accentuate price swings. Still, it marked one of the few ways investors were able to react to the trial in real time, with price movement closely tied to news of the verdict.
Trump Media remains highly valued relative to the size of its business. Even after its recent decline, the company is worth more than $8.5 billion in market value. Trump owns about two-thirds of the company’s shares, a stake valued at about $5.5 billion. The stock has become his main source of wealth since Trump Media made its market debut in March, but he cannot sell or borrow against the stock until September.
Trump Media has reported large losses and modest revenue, which stems from advertising on Truth Social. In the first quarter of this year, the company posted an operating loss of $12.1 million and $770,000 in revenue, a 30 percent drop in sales from the same period a year earlier.
On Truth Social, which has become Trump’s personal megaphone to criticize judges, prosecutors and critics, many users came to his defense. Truth Social’s roughly seven million registered users are some of Trump’s most ardent supporters, and many are also investors in Trump Media, which partly explains the company’s sky-high stock valuation.
Friday morning. Some of the most popular 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 inverted flag is recognized as a sign of distress and some deniers of Trump’s 2020 election loss adopted it as a symbol of their belief. The New York Times reported that Alito’s wife had waved an upside-down American flag outside one of her homes in January 2021.
Trump’s presidential campaign immediately began fundraising following the guilty verdict, and some of those ads appeared on Truth Social. Several described Trump as a “political prisoner.”
Trump Media’s regulatory filings have long warned investors about the risk of Trump being convicted in one of four criminal cases against him in state and federal courts. A recent filing said that “an adverse outcome in one or more of the ongoing legal proceedings involving President Donald J. Trump could adversely affect” the company and the Truth Social platform.