Former President Donald Trump was set to reap a multibillion-dollar payday from the initial public offering (IPO) of Trump Media and Technology Group (TMTG). But now, it looks like the stock could be worth a fraction of what it initially traded for by the time he can actually capitalize on it.
The stock (trading as "DJT" on the Nasdaq Composite) has already lost nearly $4 billion in value after its first week of trading, cheapening the value of Trump's shares in the company. As a result of the stock's poor performance, Trump has personally lost $1 billion in his estimated net worth as $DJT continues to crater. This has resulted in Trump lashing out at his partners in the business venture, attempting to zero out their shares as punishment for allegedly setting up the company improperly.
Bloomberg reported Tuesday that Trump sued Andy Litinsky and Wes Moss in Florida state court in an attempt to have the court give him their combined 8.6 percent stake in TMTG, which is worth over $600 million. The former president alleges that Litinsky and Moss botched the establishment of the company's corporate governance structure and mishandled its merger with a special purpose acquisition company (SPAC) earlier this year dubbed Digital World Acquisition.
"Moss and Litinsky failed spectacularly at every turn," the lawsuit alleges. "They made a series of reckless and wasteful decisions at a critical time that caused significant damage to TMTG and a decline in the stock price of its merger partner."
Trump's lawsuit in Florida comes after Litinsky and Moss filed their own lawsuit against the former president in Delaware Chancery Court in February. The two investors accused Trump of orchestrating a scheme to "drastically dilute" the value of TMTG's shares in what they referred to as "11th hour, pre-merger corporate maneuvering." While Trump initially had control of 90 percent of the company and had 78 million shares in the company, his business partners alleged that he tried to inflate the number of shares to one billion, which would have reduced their stake to less than one percent of the company.
"[Litinsky and Moss' company was] promised 8.6 percent of this company and sadly its business partners are baselessly trying to renege," attorney, Christopher J. Clark told the Washington Post in February. "They feel like: We made Truth Social for you. You get 90 percent. But some people just aren’t happy with 90 percent."
Trump's business partners alleged that the former president's schemed to artificially create new shares to possibly then give to himself and his family members. Prior to going public last week, the SPAC that facilitated TMTG's merger told the Securities and Exchange Commission that the pending litigation could "negatively impact investor confidence and market perception."
According to Bloomberg, the fact that Trump filed a lawsuit in Florida rather than countersuing Litinsky and Moss in Delaware angered chancery court Judge Sam Glasscock III, who may sanction Trump over the suit. Glasscock was reportedly "gobsmacked" at learning of the former president pursuing separate litigation outside of his courtroom.
While the litigation between Trump and his business partners may have played a role in the nosedive of TMTG's stock, the primary cause for $DJT plummeting by $4 billion in value was a recent filing with regulators. That filing stated that TMTG needed the SPAC's funding to remain operational, and that the company suffered $58 million in losses last year.
In raw numbers, Truth Social remains far below its competitors in the social media world, like Facebook, X/Twitter, Instagram, WhatsApp and TikTok. Truth Social is apparently not even counted among the top 100 apps on the Apple App Store.
Reprinted with permission from Alternet.
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