Trump Media & Technology Group Sees Stock Price Surge After SEC Declares Registration Statement Effective, But Experts Warn of Overvaluation

On Monday, the stock price of Truth Social platform operator Trump Media & Technology Group Corp (TMTG) increased. Last week, TMTG announced that it expects to receive over $69.4 million from the cash exercise of warrants on June 20 and 21, 2024. This option became available after the Securities and Exchange Commission (SEC) declared TMTG’s registration statement effective on June 18, 2024.

If all warrants covered by the registration statement are exercised for cash, TMTG could receive up to approximately $247 million. In addition to this, $40 million of restricted cash will become unrestricted due to the effectiveness of the registration statement. These funds will add to the over $200 million in unrestricted cash already held by TMTG as of June 18, 2024. The additional funds are expected to support further development and expansion of its platforms, including Truth Social.

Despite recent market fluctuations, experts caution that TMTG remains overvalued compared to other social media companies like Elon Musk’s X, Reddit Inc., and Meta Platforms Inc.’s Instagram Threads. Some experts draw comparisons between TMTG and meme stocks like GameStop Corp. and AMC Entertainment Holdings which trade on momentum rather than fundamentals.

Former President Donald Trump holds a dominant stake with 114.75 million shares in TMTG has seen his value drop from $6 billion to about $3.1 billion since late May . The company plans to use the funds raised from this exercise to enhance its ad platform and explore potential mergers and acquisitions.. As of premarket on Monday, Trump Media & Technology Group Corp stock has gained 118% in the last year and is currently trading at $29.63 per share