Trump Media stock falls on SEC declaration

Trump Media & Technology Group's (DJT) stock fell Thursday following the Securities and Exchange Commission's (SEC) approval of a regulatory filing permitting investors holding the company’s derivatives to convert them into shares. This move potentially paves the way for a significant increase in the company's outstanding shares, which may dilute existing shareholders' stakes.

Morning Brief co-hosts Brad Smith and Madison Mills break down the details.

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This post was written by Angel Smith

Video transcript

Shares of Trump Media falling this morning after saying the SEC has declared the registration of additional shares effective.

The move could dilute shares that are existing in the market.

Already here and there, you're taking a look at the reaction here.

Pre market shares are down by about 11%.

What's interesting is they're expecting to potentially see an aggregate of approximately $247 million and proceeds.

Now they're likely to make sure that they can exercise any future transactions that would also include acquisitions or mergers.

All of these things considered it's cash that they would potentially want to put towards building out this media vision that they've communicated to the street but not fully delivered to this point and Brad, just to add a little bit of context there.

This essentially allows investors in the firm's derivatives to swap out those derivatives, which are known as warrants for holdings of shares in the actual company.

But that can dilute those long time investors in this name, which is not that long because it went public very recently.

But over the past month, this is a name that's down over 35%.

If I take a look at all time, though.

The stock is still up and it's up 80% year to date here.

So a long term investor story of growth.

But this could be a bear signal for those long time executives, and that's exactly what we were seeing.

Just this announcement.

That stock was down over 17%.

So the question about whether or not this is going to dilute shares for existing shareholders moving forward kind of being affirmed based on that stock price, which continues to go down days after this initial decision, lost money during the first quarter, and it has been very me of a trade thus far, very much so.