Trump Media stock closes up 5% in heavy trading after co-founders dump DJT shares

In a notable move that grabbed the attention of investors, shares of Trump Media & Technology Group (DJT) experienced a 5.58% surge in heavy trading on Friday. The stock closed at $14.76 per share, showing an unusual rise after a major shareholder, United Atlantic Ventures LLC (UAV), sold off almost its entire stake the day before. The sale, which took place on Thursday, marked a pivotal moment in the company’s recent history, as UAV offloaded nearly 11 million shares, retaining only a minimal 100 shares.

United Atlantic Ventures, led by former "Apprentice" contestants Andrew Litinsky and Wes Moss, had co-founded the social media firm with Donald Trump back in 2021. Trump Media is best known for its Truth Social platform, a conservative social media network with Trump as its largest shareholder. The sell-off from UAV follows a contentious legal battle with Trump Media and comes just days after the expiration of a lockup agreement that restricted early investors and major shareholders like Trump from selling shares until September 19.

The timing of this sale was not surprising, as it came on the heels of a period of sluggish performance for Trump Media stock. The company had just endured six consecutive trading sessions in the red, culminating in a 52-week low on Monday. However, Tuesday brought a brief reprieve, as DJT shares broke their losing streak, climbing more than 5% to close at $12.79 per share.

The decision by UAV to liquidate its holdings in Trump Media attracted attention, not only for its scale but for the potential windfall. Although the Securities and Exchange Commission (SEC) filing did not disclose the exact amount UAV received from selling its 5.4% stake, estimates suggest that the firm could have garnered between $128 million and $170 million, depending on the fluctuating stock price since the lockup period ended.

Despite the heavy sell-off, Trump Media shares managed to defy expectations by closing up over 5% on Friday. Analysts have suggested several reasons for this unexpected rise. Some believe the market had already priced in the sale, while others speculate that investors may have been covering their short positions, driving up demand for shares. There’s also the possibility that buyers with vested interests in maintaining the stock’s value stepped in to support prices in the wake of the large sale.

Another key factor that might have helped stabilize the stock is former President Donald Trump’s decision to hold on to his significant ownership in the company. Trump owns approximately 57% of Trump Media's outstanding shares and has publicly stated that he has "absolutely no intention to sell." This commitment, combined with the belief that Truth Social’s success hinges on Trump’s ongoing involvement, likely reassured some investors who may have otherwise been spooked by UAV’s exit.

However, even with Friday’s gains, Trump Media’s stock remains in a precarious position. The company’s shares have fallen more than 77% from their peak since making their debut on the Nasdaq in March. The stock initially surged following a merger with a special purpose acquisition company (SPAC), but since then, it has faced increasing volatility, exacerbated by regulatory scrutiny, shifting market conditions, and questions about the long-term viability of Truth Social.

As of the end of the week, Trump Media boasted a market capitalization of $2.954 billion, a significant decline from its earlier highs. While the company's future remains uncertain, its performance will likely continue to be closely tied to the popularity of Truth Social and Trump’s political influence.

Investors and analysts alike will be watching to see how Trump Media navigates the post-lockup period, especially with the lingering potential for other major shareholders to follow UAV's lead and sell their stakes. Additionally, the company’s reliance on Trump’s active participation and the platform’s ability to retain and grow its user base will be critical in determining whether it can reverse its long-term decline or face further challenges in the market.

In the broader context, Trump Media’s stock movement also serves as a reflection of the current political and financial climate, where companies tied to high-profile political figures often experience wild market swings based on news, sentiment, and speculation. The coming months will be telling for both the company and its shareholders as they navigate this period of uncertainty.