Following the announcement of a $400 million share repurchase program by Trump Media and Technology Group Corp., the parent company of President Donald Trump’s social media network Truth Social, shares of the company surged on Monday.
The business claimed that the scheme, which was approved by the board of directors, would not have an impact on its newly revealed bitcoin treasury plan.
After closing at an 11-week low on Friday, the stock (DJT) saw a 2.6% increase in morning trading. It has fallen 30.7% through Friday, continuing a four-week losing run.
According to Trump Media, the shares that were repurchased would be retired and the repurchases would take place on the open market.
Up to 21.9 million shares, or 9.9% of the total number of shares used to determine the company’s first-quarter losses per share, would be represented by the $400 million program at current prices. As of March 31, there were 220.6 million outstanding shares, a 143% increase from the previous year.
Large increases in the number of outstanding shares of a corporation typically make investors unhappy because it means their ownership stake in the company decreases. They might therefore rejoice when a business decides to use buybacks to lower the number of shares.
In a private placement that concluded on May 30, Trump Media announced arrangements to sell $1 billion in debt that could be converted into stock and $1.5 billion worth of common stock in April.
With the money raised from the offering, the company said it would become “one of the top bitcoin holders among publicly traded U.S. firms.”
Read: The stock of Trump’s social media company is rising as it becomes a legitimate bitcoin participant.
The business stated that it would not alter its approach to buying bitcoin and that the $400 million share repurchase program would not be funded by the funds obtained for bitcoin. “The repurchase program was a separate confirmation of the strength of the company’s financial outlook,” stated Chief Executive Devin Nunes.
“The board took a vote of confidence in our company, our stock, and our strategic plans,” Nunes stated. “Since Trump Media now has approximately $3 billion on its balance sheet, we have the flexibility to take actions like this which support strong shareholder returns, as we continue exploring further strategic opportunities.”
Since Trump’s inauguration, the DJT stock has fallen 54.3%, and the S&P 500 index, SPX, has decreased by 0.1%.
