Former President Donald Trump saw a significant decrease in his net worth on Friday, following his conviction on 34 felony counts for falsifying records. The majority of Trump’s wealth is tied up in Trump Media, the parent company of the Truth Social social media platform, which experienced a 5% drop in its share price under the ticker $DJT. Trump’s 65% ownership in the company resulted in a $316 million decline in the value of his shares. Despite the initial negative impact of the verdict on the stock, there was a brief moment of positivity in pre-market trading on Friday, which quickly turned negative again during normal hours.
According to Forbes’ latest calculations, Trump’s net worth dropped to $7.5 billion on Friday morning, making him the 357th-richest person in the world. This is down from his $7.8 billion net worth as of market close on Thursday, when he was ranked as the 334th-richest person globally. Trump’s fortune is heavily tied to his $5.6 billion stake in Trump Media, which saw a decrease in value to $5.9 billion following the drop in share price. The volatility in the stock appears to be driven by retail investors who are trying to understand the implications of the verdict on the company’s future.
Yale School of Management professor Raphael Duguay explained that the recent fluctuations in Trump Media’s stock can be attributed to retail investors who are not behaving like traditional institutional investors. He noted that people are forming their beliefs about the stock and its future without the guidance of legal experts or financial professionals. Trump Media went public in March through a reverse merger with a blank-check company after facing regulatory and legal challenges for two years. Despite the company’s relatively low revenue of $771,000 in the first three months of 2024, its market capitalization stands at $9 billion.
In October 2021, Trump Media disclosed the potential impact of a “materially disruptive” event, such as a felony conviction for Trump, on potential shareholders. Trump, who owns a majority of the company, is not a member of the board of directors, though his son Donald Trump Jr. and other allies are involved. The performance of Trump Media on the public markets has been surprisingly strong, with the stock trading about 25% higher in after-hours trading compared to its blank-check predecessor before the merger. The disconnect between the company’s financial reality and its market valuation has raised concerns among fundamental-focused investors.
Overall, the impact of Trump’s felony conviction on Trump Media’s stock price highlights the challenges faced by retail investors in navigating complex legal and financial issues. While the stock initially experienced a drop following the guilty verdict, there were brief moments of positive momentum driven by social media activity among Trump’s supporters. As the situation unfolds, it remains to be seen how Trump Media will navigate the aftermath of the verdict and its implications for the company’s future.
