Trump Launches Surprising Lawsuit Against Truth Social Co-Founders
President Donald Trump has initiated a legal battle against two co-founders of the Trump Media & Technology Group Corp. The company is the parent of the social media platform Truth Social which recently went public.
The lawsuit, filed on March 24 in Florida state court, alleges that Andy Litinsky and Wes Moss, the co-founders in question, improperly set up the company thereby disqualifying themselves from owning any stock. Trump’s legal team argued that Litinsky and Moss violated the agreed terms during the company’s formation and, as a result, do not deserve to hold their 8.6% stake, valued at a whopping $606 million according to Bloomberg Law.
Donald Trump has ramped up a battle over shares in his newly public Trump Media & Technology Group with a lawsuit against his co-founders, claiming they violated an agreement and shouldn’t get any stock in it at all https://t.co/LmqR49USMY
— Bloomberg Markets (@markets) April 2, 2024
The legal confrontation is not a one-sided affair, however. Litinsky and Moss had previously brought a lawsuit against Trump in the Delaware Chancery Court, claiming they were promised a stake in the social media company which they have yet to receive.
Adding to the drama is the volatile performance of Trump Media’s stock. After merging with a special purpose acquisition company (SPAC), the stock has experienced wild fluctuations. A recent securities filing disclosed a concerning $58 million loss for the company in 2023, along with a “relative trickle of revenue.”
The financial report, paired with a warning about the necessity of SPAC deal funds for continued operation, led to a 21% drop in stock value. However, the stock price saw a partial recovery the following day, up 6.1% in late trading in New York.
The financial phenomenon last week initially placed Trump’s media firm’s share price at an astonishing 2,000x its revenue, drawing attention from investors as well as critics of the former president. Some argued the company’s value is less about its financial fundamentals and more about investment in Trump’s brand and political future.
Trump, who owns a 78% stake in the company, saw his net worth swell by $6 billion as a result of trading, making it the single greatest one-day return for him in his career. The stock opened Tuesday morning at a price of $78 per share. Analysts are continuing to monitor the fundamentals of Trump’s venture, which they say will need to increase its quarterly revenues if it is to sustain the lofty valuation.
Trump Media brought in $3.4 million over the first nine months of 2023, presenting an opportunity for advertisers to flock to Truth Social. According to data from Trade Alert, the stock is among the most actively traded. Posts on social media suggest that some supporters of Trump have purchased shares in TMTG. However, a significant portion of the trading volume appears to be driven by speculators aiming for quick profits.
The stock saw significant volatility Monday, dropping more than 20% of its value. This comes after Trump secured a $175 million bond payment late Monday night, staving off the potential seizure of New York skyscrapers, golf courses, and other properties by the state’s attorney general.
With large investment firms set to disclose any positions in TMTG by the end of March, it’s unclear if hedge funds and other Wall Street entities will embrace these risks and participate in the GameStop type run.