Investigating Trump Media’s Mysterious Stock Moves (Conspiracy… Or Not?)

Wall Street tiptoed into the week with the S&P 500 sneaking up 0.08% to 5,463.54, while the Nasdaq inched up 0.07%—just enough to grab a snack from the fridge. 

The Dow, however, decided to call in sick, dropping 0.12%.

On Semiconductor (yes that’s their name) stole the show, rocketing 11.5% after reporting knockout earnings, and Tesla zoomed ahead 5.6% thanks to Morgan Stanley's fan club. 

This week's earnings reports from “MAG 7” members Microsoft, Meta, Apple, and Amazon will be the ultimate test to see if tech stocks can shake off last week's slump and make a comeback.

Investigating Trump Media’s Mysterious Stock Moves (Conspiracy… Or Not?)

When it comes to Trump news, there's always a buffet, but Trump Media has been on a strict information diet lately. So what’s the latest fancy dish causing our stomachs to groan? It’s all centered around the eerie silence about the second quarter earnings report.

Most people don’t know this, but on September 25, a large number of "locked-up" shares will be available for sale. You'd think management would be out there with a megaphone, praising Trump Media and painting a bright picture of the future. But nope, all we hear are crickets.

Now whether you're a MAGA fan or you hate the guy, we can all agree on one fact: the first quarter earnings were weak. I mean seriously, Trump Media reported a staggering $327.6 million loss, compared to just a $210,300 loss a year earlier. 

This makes the second quarter report even more important. Yet here we are, with no date set for the earnings release, and time is running out. This silence feels like deja vu. Just like when the first earnings drop left the “fake news” free to highlight the negative numbers and paint their own narratives.

Now, I did even more digging and here’s where things get interesting. Just before the Fourth of July, Trump Media made a low-key but significant move. They announced a Standby Equity Purchase Agreement, which gives them the green light to sell up to $2.5 billion worth of new shares. I want you to imagine Trump Media as a pie – they’re essentially slicing the pie into more pieces, making the overall pie bigger but each individual slice smaller.

But instead of going the traditional route and hiring a big-name investment bank like J.P. Morgan to handle the share sales, Trump Media chose Yorkville Advisors, a smaller firm based in New Jersey. This move is more common with high-risk penny stocks and meme stocks that get hyped up on Reddit. Yorkville has a history of dealing with smaller biotech companies and even the meme stock electric vehicle startup Lordstown Motors. They don't plan to hold onto the stock themselves but act as a facilitator, making it easy for Trump Media to sell shares whenever they want.

Here’s the deal: Trump Media can sell up to $2.5 billion in shares to Yorkville. In return, Yorkville gets a fee upfront and a 2.75% discount on the shares. They then turn around and sell those shares to other buyers, pocketing the difference. This method is attractive for companies seen as too risky by top investment banks or those betting on their stock's popularity among retail traders.

Now, call me a conspiracy theorist, but the timing of these events seems too perfect to be a coincidence. On one hand, you've got the potential release of a mountain of shares that could affect the stock price. On the other hand, you've got a sneaky plan to rake in $2.5 billion by selling new shares. It’s almost like management is trying to pull a Houdini act to keep the magic going.

Combine that with the fact that Trump Media stock is overvalued and is selling at over 7,000 times sales, with a cash reserve that wouldn't cover a decent lunch at Trump Tower—just $1.44 per share. Once those shares are free, I’m expecting a wave of selling and short sellers piling that could send prices plummeting.

So, what’s the takeaway here? This isn’t about politics. Like every company trading publicly, Trump Media’s management is doing what they think is best to keep the lights on and the show running. But as an investor, you’ve got to look out for yourself. If you’re in it for the long haul with Truth Social, it might be wise to reconsider and maybe take some profits off the table until we see how this plays out. Or if you are going to gamble on the stock, maybe don’t do it with your moms house like you did with AMC a couple years ago.

Stock.News has positions in Tesla, Microsoft, Apple, Meta, and Amazon.