Stock shares of Trump Media and Technology Group, the owner company of the social media platform called Truth Social, plummeted before Friday’s market open after former President Donald Trump was convicted in his hush money trial.
A New York jury found Trump to be guilty of the alteration of business records in a scheme to affect the election of 2016 illegally, by way of hush money payments made to an adult film actress who made a claim of having sexual relations with Trump.
Stock shares dropped by 9% on Thursday immediately after hours as word of the verdict spread, then dropped another 5% on Friday morning.
The stock, with the trading symbol “DJT”, has demonstrated extreme volatility since its debut in late March, making it part of the community of meme stocks that have a tendency to swing drastically from high to low prices as small-scale investors attempt to catch the upward movement at the precise moment.
The stock has tripled this year, with frequent double-digit percentage moves either up or down in a single trading session. It reached a peak of almost $80 per share in intraday trading on March 26. As context, the S&P 500 has increased by nearly 10% for the year.
Other meme stocks, including GameStop and AMC Entertainment, also saw declines on Friday morning, as did social media company stock shares, but the downturn for Trump Media was at least double the decline of any stock in either sector before the opening bell.
In a registration statement with the U.S. Securities & Exchange Commission prior to going public, Trump Media alerted potential investors about the possibility of legal challenges faced by the former president and the possible adverse effects on the stock price. “President Donald J. Trump is the focus of numerous legal proceedings, the degree and magnitude of which are unprecedented for a former President of the United States as well as a current candidate for the office. An unfavorable outcome in any of the ongoing legal proceedings in which President Donald J. Trump is involved could negatively impact TMTG and its Truth Social platform.”
Earlier in May, Trump Media declared a loss of more than $300 million in the most recent quarter, based on the company’s initial earnings report as a publicly traded company.
The company declared a loss of $327.6 million for the three-month period ending March 31, which included $311 million in non-cash expenses related to the merger with a special purpose acquisition company (SPAC) known as Digital World Acquisition Corp. SPACs offer younger companies quicker and less complicated paths to publicly trading their shares, but with significantly reduced scrutiny.
Trump Media & Technology dismissed an auditor this month that was recently charged by federal regulators with “massive fraud.” The media company terminated the services of BF Borgers as its independent public accounting firm on May 3, which delayed the filing of the quarterly earnings report.
Trump Media had previously cycled through at least two other auditors — one resigned in July 2023 and another was terminated by the board of directors in March, shortly before BF Borgers was rehired.
Trump was indicted on 34 counts of falsifying business documents at his company in connection with an alleged scheme to suppress potentially embarrassing news stories about him during his Republican presidential campaign in 2016.
The charge, a felony, originated from reimbursements paid to Trump’s then personal lawyer Michael Cohen after Cohen paid $130,000 in hush money to adult film star Stormy Daniels to silence her claims of an extramarital sexual encounter with Trump in 2006. Trump was accused of misrepresenting Cohen’s reimbursements as legal expenses to conceal their connection to the hush money payment.
Trump’s defense argued that the payments made to Cohen were for legitimate legal services.