Donald Trump's media company fell 12%, continues to sell off

(Reuters) – Shares of Donald Trump's media and technology company fell as much as 12% on Monday, continuing a sell-off that has now reduced the value of his stake in operator Truth Social to $2.9 billion.

After a strong debut in late March, investors were nervous about Trump Media and Technology Group after the company disclosed multi-million-dollar losses earlier this month and said it would struggle to meet its financial obligations.

The company's stock closed down 8.4% at $37.17 on Monday, a far cry from the record high of $79 it achieved during its March 26 debut. It's down nearly 40% so far in April.

These declines reduce the potential windfall for Trump who may sell his shares to raise money for his 2024 presidential campaign and legal expenses, although six-month lock-up restrictions may prevent him from selling or borrowing against his stake.

Former US President Trump – who owns about 78.75 million shares in the company – witnessed a sharp decline in the valuation of his stake from about $6 billion last month.

The market cap of the entire Trump Media & Technology Group is now below that number, at about $5.55 billion.

But the declines are welcome news for short sellers who have suffered huge losses in stocks so far this year.

Trump Media & Technology Group has a short stake of about 4.75 million shares, or 12% of its free float, according to analytics firm S3 Partners.

Monday's decline means those betting against the stock made about $16 million in market-to-market profits, although those shorting the stock are still down 69% for the year.

“DJT's recent price weakness has offset the huge financing costs incurred by short sellers, keeping many of them in the trade,” said Ihor Dusaniwski, Managing Director of Predictive Analytics at S3 Partners.

(Reporting by Priyanka G in Bengaluru; Editing by Maju Samuel)