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The share price of Trumpmedia fell more than 17% in after-hours trading on Tuesday after the owner of the Truth Social app reported its registration additional shares was declared effective by the Securities and Exchange Commission.
Trump Media, which trades under the DJT ticker, saw its stock price drop nearly 10% during the regular trading day.
The SEC's statement gives early investors in Trump Media permission to practice public orders they own the company, whose majority shareholder is former President Donald Trump.
Trump Media said in a prospectus filed Tuesday with the SEC that up to 14,375,000 additional shares would be issued upon the exercise of those warrants.
The company noted that there could be “a significant decline in the public trading price” of the shares if warrant holders sold their shares or if there was a “perception that these sales could occur.”
But Trump Media said existing shareholders who sold at a lower price after registration could still “experience a positive return on the shares … due to the lower price per share” when they purchased them.
The prospectus also stated: “If all warrants covered by the Registration Statement are exercised for cash, [Trump Media] may receive up to a total of approximately $247 million in proceeds.”
“In addition, $40 million of escrow cash on the Company's balance sheet will become unrestricted as a result of the effective date of the Registration Statement,” the prospectus said. “These funds would complement the more than $200 million in unrestricted cash the company now holds.”
Trump Media CEO Devin Nunes said in a statement: “Today marks another milestone for Truth Social.”
“Now that our S-1 has been declared effective, we expect we are well positioned to vigorously pursue TV streaming, other improvements to the platform and potential mergers and acquisitions,” Nunes said.
“With approximately 620,000 retail shareholders supporting our vision, the company looks forward to growing quickly and powerfully.”
