Patrick Orlando, the ex-CEO of Trump Media & Technology Group’s (DJT) blank-check partner, has been accused of cheating shareholders. A lawsuit filed recently with more than 12 investors alleges that he diverted hundreds of millions of dollars worth of assets to himself and his family through an offshore shell company, as well as other entities.
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Orlando has no direct connection to Trump Media Group. He previously served as CEO of Digital World Acquisition Corporation, the special purpose acquisition company (SPAC) that helped take it public. However, the blank-check firm fired him one year before the long-awaited merger closed and DJT stock began trading.
What’s Happening with DJT Stock?
Despite Donald Trump’s win over Kamala Harris this week, DJT stock has been trending downward for the past two days. Shares closed out trading yesterday down 23% and have been volatile in pre-market trading today, taking it into the red for the week. This decline from the stock’s election day surge indicates that even when macroeconomic trends are shifting in its favor, the company may still not be strong enough to achieve sustainable growth.
The lawsuit against Orlando may not directly impact DJT stock, as he is no longer the CEO of its SPAC partner and hasn’t been since before it started trading under the new symbol. However, the stock is struggling right now and investor confidence is likely low. Being linked to a company whose former CEO has been accused of illicit activity involving cheating shareholders won’t help its reputation.
This also isn’t the first time that legal action has been taken against Orlando. Business Insider reports that in July 2024, the Securities and Exchange Commission filed a lawsuit against him, alleging that he knowingly provided false information regarding his intent to merge with the Trump Media Group. Now he is facing even more accusations at a critical time for DJT stock.
Is it Time to Sell DJT Stock?
TipRanks contributor Bernard Zambonin recently suggested that this may be the time to sell DJT stock, noting that from his perspective, the negative catalysts are likely to outnumber the positive ones, even as Trump assumes the presidency.
Since no Wall Street analysts currently follow DJT stock, it is hard to assess which rating it deserves. But as noted, the fact that it has been falling in the wake of Trump’s victory shows that even him winning the presidency is not enough to keep it in the green. On top of that, the company recently reported disappointing Q3 earnings, including a steep Q3 FY24 loss.
