Former US President Donald Trump has suffered substantial financial setbacks, resulting in his removal from the global billionaire index amid an ongoing legal battle.
This led to the crash of his Truth Social platform on Wednesday.
Trump’s exclusion from the Bloomberg Billionaire index stems from the dismal performance of Trump Media, the parent company of the Truth Social app.
The company experienced a notable decline in its share price, plunging by 8.57% in Wednesday’s trading session. This downturn led to Trump Media’s market capitalization plummeting below $4.7 billion, marking a significant departure from its previous valuation of $7.85 billion in March.
At the close of trading, Trump Media’s stock price stood at $34.26 per share, a stark contrast to its opening price of $70.90 on March 26, when it made its debut as a publicly traded entity.
Additionally, the stock fell nearly $2.70 per share below the closing price of Digital World Acquisition Corp., the former shell company, on March 22, the day when shareholder approval was obtained for the merger with Trump Media.
Recommended reading: World’s richest man, Bernard Arnault, 2 others lose $5.7 billion in 1 day
What you should know
The precipitous decline in Trump Media’s share price reflects a month-to-date downturn of 44.71%, showing the magnitude of the market’s response to recent developments. Notably, former President Donald Trump retains a substantial ownership stake in the company, holding nearly 60% of its shares.
However, the value of Trump’s holdings has plummeted to less than $2.7 billion as of Wednesday’s close, a stark contrast to the over $5 billion valuation merely two weeks prior.
Trump first made headlines in March after he entered the top 500 global billionaire rankings with a $6.5 billion net worth which later grew to about $7.4 billion.
More legal battles for Trump
Amidst all of these, Andy Litinsky and Wes Moss, co-founders of Donald Trump’s social-media venture, have sued the former president, alleging retaliation for their lawsuit challenging the value of their stake in the company.
Trump first pulled the plug on Truth Social co-founders alleging they mishandled the company’s formation and are undeserving of their stake.
In the lawsuit filed in Florida state court on March 24, Trump contends that Andy Litinsky and Wes Moss breached an agreement regarding the company’s setup and should forfeit their 8.6% stake, valued at $606 million.
However, recent developments have seen Litinsky and Moss securing a significant victory in their legal battle. A Delaware judge, Sam Glasscock III, has granted them permission to augment their lawsuit with a fresh claim.
This new assertion alleges that Trump retaliated against them by imposing a restrictive six-month lockup period, effectively prohibiting the sale of their shares. This augmentation amplifies their previous accusations, alleging Trump’s endeavors to diminish their collective ownership stake in the company, which oversees the struggling Truth Social platform.
Rivals’ mixed performance
Unlike Truth Social, Meta’s shares have surged impressively, marking a notable 7.49% increase in performance over the course of the past month. As of April 10, 2024, the tech giant closed at $519.93, reflecting investor confidence and optimism in the future trajectory.
Conversely, Snapchat has experienced a downturn, with its shares plummeting by 8.34% in the same one-month period. As of April 10, 2024, Snapchat closed at $10.88, indicating a challenging landscape for the social media platform amid intensified market competition and evolving consumer preference.
Other insight
Initially centered on thwarting Trump Media’s merger with Digital World Acquisition Corp, the lawsuit now delves into broader allegations of corporate misconduct.
Despite the merger ostensibly inflating Trump’s theoretical wealth, the company has faced a significant $2.8 billion decline in value, prompting apprehension among investors. Trump, wielding a substantial nearly 60% stake, remains bound by the lockup agreement, barring him from offloading shares for the ensuing six months.
In response to Litinsky and Moss’s legal maneuvering, Trump Media’s legal representatives contend that the duo seek to unjustly modify their Delaware lawsuit to sidestep the necessity of filing a new complaint. They argue that share lockups are customary in blank-check transactions, asserting that premature liquidation of Litinsky and Moss’s shares would detrimentally affect the company and its shareholders.
