Trump Media's Stock Declines Following Hush Money Verdict

Trump Media Shares Drop After Hush Money Verdict

Shares of Trump Media & Technology Group, owner of Truth Social, fell on Thursday. This followed former President Donald Trump’s conviction in his hush money trial, according to the Associated Press.

A New York jury found Trump guilty of falsifying business records. This was part of a scheme to influence the 2016 election through hush money payments to a porn actor who alleged a sexual encounter with Trump.

The company’s stock, trading under the ticker "DJT," dropped about 9% in after-hours trading as the verdict was announced. The stock has been volatile since its debut in late March.

Stock Volatility and Performance

Despite the volatility, Trump Media's stock has tripled this year. It often makes double-digit percentage moves in a single day. It peaked near $80 in intraday trading on March 26. In contrast, the S&P 500 is up almost 10% year to date.

Earlier this month, Trump Media reported a loss of over $300 million for the last quarter. This was according to its first earnings report as a publicly traded company.

Financial Losses and Auditor Changes

For the three months ending March 31, the company posted a loss of $327.6 million. This included $311 million in non-cash expenses related to its merger with Digital World Acquisition Corp. (DWAC).

DWAC is a special purpose acquisition company (SPAC). SPACs can help young companies get shares trading publicly faster but with less scrutiny.

Trump Media recently fired an auditor charged with fraud. On May 3, the company dismissed BF Borgers as its public accounting firm, delaying its quarterly earnings report.

The company had previously cycled through at least two other auditors. One resigned in July 2023, and another was terminated by its board in March, just as BF Borgers was rehired.

Legal and Financial Implications

Trump faced 34 counts of falsifying business records related to the alleged scheme. This involved hiding potentially embarrassing stories during his 2016 campaign.

The charge stemmed from reimbursements to then-Trump lawyer Michael Cohen. Cohen made a $130,000 hush money payment to porn actor Stormy Daniels to silence claims of an extramarital encounter with Trump in 2006.

Trump was accused of misrepresenting these reimbursements as legal expenses. This was to hide that they were tied to the hush money payment.

Trump's defence argued that the payments to Cohen were for legitimate legal services.