Trump Media DJT plunged over 9% during trading, reported that the presidential trust and internal shareholders may sell shares, the company responded

Trump Media & Tech Group stated that it may sell a large number of shares in the future, including over 100 million shares held in trust by Trump himself, leading to a significant drop in DJT's stock price.

Specifically, a public document submitted by Trump Media & Tech Group, the parent company of the social platform Truth Social, on April 1 indicated that the company may sell approximately 8.4 million shares of common stock. These shares are related to the warrants issued at the time of the company's listing and are for resale registration of shares involved in previously issued warrants, which may become tradable stocks in the future.

Additionally, the company stated that internal shareholders and major investors may periodically sell about 134 million shares, including 114 million shares held by Trump's revocable trust.

The company specifically pointed out that the total number of resalable shares accounts for 129.2% of the current total outstanding shares, indicating that the potential scale of shares to be sold far exceeds the currently tradable portion of the market.

Following the news, the company's stock price fell nearly 9.4% in early trading to $18.36, a drop of nearly 77% from its historical high.

Subsequently, Trump Media & Tech Group issued a statement to clarify the issue:

“Some media have falsely claimed that the document submitted by the group today is to prepare for the sale of company shares by Trump's trust.

It should be clarified that these shares were registered in the S-1 form as early as last June, and today is merely a routine re-registration to transfer them to the S-3 form to ensure that the company's information remains valid and compliant.

In fact, there is currently no window for internal personnel to sell equity.”

Last September, Trump himself stated that he had no plans to sell shares. His son, Donald Trump Jr., is responsible for managing the trust.

After the company issued the clarification, the stock price rebounded from around $18.36 to above $19.50, narrowing the overall decline for the day. Analysts believe that even with the clarification, whether or not there is a real sale, just the market's expectations could lead to a significant drop in stock prices, and investors remain concerned about major shareholders choosing to reduce their holdings.

As of Wednesday morning, the stock price was still around $19, with the "paper market value" of the shares held by Trump's trust exceeding $2 billion, which starkly contrasts with the company's actual business revenue, projected to be less than $4 million in 2024, with a net loss of up to $401 million. However, the company had previously stated plans to expand into the financial services sector in the future.

Additionally, the company warned in the document that internal shareholders initially bought at a low price, and even if they sell now and drive the stock price down, they would still profit. However, ordinary investors, such as retail investors, are different; they bought at a high price, and if the stock price drops, they may incur losses