Trump Media & Technology Group Corp, the operator of the Truth Social platform (DJT), is seeing an increase in its stock price on Monday. Last week, the company announced that it expects to receive over $69.4 million from the cash exercise of warrants on June 20 and 21, 2024. This cash exercise option became available after the Securities and Exchange Commission (SEC) declared the company’s registration statement effective on June 18, 2024.
TMTG revealed that if all warrants covered by the registration statement are exercised for cash, the company 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 the recent decline in market value, experts caution that TMTG remains overvalued. Truth Social, while gaining popularity, is still considered a minor player in the social media landscape compared to platforms like Elon Musk’s X, Reddit Inc, and Meta Platforms Inc Instagram Threads. Some experts draw comparisons to meme stocks like GameStop Corp and AMC Entertainment Holdings, which trade on momentum rather than fundamentals.
Former President Donald Trump, the dominant shareholder with 114.75 million shares, has seen the value of his stake drop from $6 billion to about $3.1 billion since late May. The company intends to use the funds raised to enhance its ad platform and explore potential mergers and acquisitions. TMTG stock has gained 118% in the last 12 months and is currently trading higher by 7.12% at $29.63 premarket on Monday.