Donald Trump Sues Two Co-Founders of Trump Media and Technology Group (DJT) for “Reckless and Wasteful Decisions” That Lead to a Decline in Stock Price

The author does not provide investment advice and holds no positions in any of the mentioned stocks.

As Trump Media and Technology Group (NASDAQ: DJT) quickly loses its initial allure on the public market, the former US President is likely seeking a scapegoat. This comes in the form of a lawsuit filed by two former co-founders of his media-focused entity.

In a recent filing with the SEC, Trump Media and Technology Group revealed that its Truth Social platform generated only $4.131 million in revenue throughout 2023, resulting in a net loss of more than $58 million. This announcement sparked a significant selling spree, causing the stock to lose most of its initial gains after its public market debut.

Trump Files Lawsuit Against Litinsky and Moss for Alleged Mismanagement of Trump Media and Technology Group

At the core of the issue is the agreement between Trump Media and Technology Group and United Atlantic Ventures (UAV), led by Andy Litinsky and Wes Moss. This agreement outlines UAV’s role in helping Trump’s media-focused entity establish a strong corporate governance structure, launch the Truth Social platform, and find a publicly-traded partner. Additionally, Litinsky and Moss are responsible for overseeing the day-to-day operations of Trump Media and Technology Group, at least in the beginning stages.

According to a recent lawsuit, Donald Trump has accused the duo of being “faithless fiduciaries”and causing significant damage to Trump Media and Technology Group. The lawsuit claims that they did not set up a suitable governance structure, mishandled the company’s daily operations, and made a poor choice in selecting Beneserre Capital Acquisition Corporation as a merger candidate, resulting in a decline in the stock price of Digital World, Trump Media’s eventual merger partner.

According to the lawsuit, Beneserre was already pursuing another merger candidate while negotiating with Trump Media and Technology Group. As a result, when Trump Media chose Digital World as its partner, the SEC intervened due to improper public disclosures. This caused a delay in the planned merger between the two companies, leading to a significant decrease in Digital World’s stock price.

Litinsky and Moss, who were acquainted with Trump during his time as host of “The Apprentice”and were the ones who initially proposed the idea of a tech startup to the former US President, have also filed a lawsuit. They allege that their original 8.6 percent stake in Trump Media and Technology Group has been significantly diluted due to last-minute changes in the company’s structure, which increased the number of authorized shares from 120 million to 1 billion. However, Trump’s legal team argues that the duo’s original agreement with Trump Media is no longer valid, rendering their legal standing in the matter null.