Why Trump Media Stock Just Sank 9.4%
Key Points
Trump Media scrapped its crypto partnership with Crypto.com after the value of Cronos tokens collapsed from $0.20 to just $0.047.
The company still holds significant crypto assets, including Bitcoin, and has taken substantial paper losses as digital asset values have plummeted.
With $3.7 million in revenue against $530 million in losses over the past year, Trump Media's $2.8 billion market cap appears disconnected from its fundamentals.
Trump Media & Technology Group (NASDAQ: DJT) stock was down 9.4% as of 3:20 p.m. ET Monday, while the S&P 500 was mostly flat and the Nasdaq Composite slipped 0.3%.
Shares of the Truth Social operator are sliding after the company decided to unwind most of its partnership with the crypto exchange Crypto.com.
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Why Trump Media walked away from its Crypto.com deal
On Aug. 7, Trump Media, Crypto.com, and Yorkville Acquisition Corp. -- a special purpose acquisition company (SPAC), meaning a sort of shell company that takes a private business public by merging with it -- all agreed to cancel a plan to create a publicly traded digital-asset treasury company (DAT) that would have bought and held Cronos (CRYPTO: CRO), Crypto.com's native token.
Cronos traded near $0.20 when the deal was announced last August and now sits around just $0.047. The math behind the DAT no longer made sense, and the deal was killed.
What this means for investors going forward
Trump Media, however, still owns the CRO it bought in anticipation of the deal as well as other crypto assets like Bitcoin. The company has been forced to take major paper losses as the value of its digital assets plummeted.
Image source: Getty Images.
After its ill-fated foray into crypto, Trump Media now says once again that Truth Social revenue is its primary focus, as well as closing a proposed merger with a nuclear fusion technology company.
This is not a stock that I would own. Over the last twelve months, it has lost more than $530 million and brought in just $3.7 million in revenues. Despite these numbers, the company's market cap is over $2.8 billion.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.