A report that Trump Media & Technology plans to dilute shareholders actually lifted its market value on Tuesday.
Trump Media & Technology, which has the ticker DJT (DJT), saw its shares rally 12% in premarket trade after the Financial Times reported the company is planning to raise $3 billion to buy cryptocurrencies.
The report cited six people briefed on the situation who said the company, controlled by President Donald Trump's family, plans to issue $2 billion in stock and another $1 billion through a convertible bond.
The company said "apparently the Financial Times has dumb writers listening to even dumber sources."
Trump Media's underlying business at the moment has little value - in the first quarter, the company lost $31.7 million on revenue of less than $1 million. Its market valuation however was $5.7 billion.
The crypto strategy is reminiscent of one adopted successfully by Strategy (MSTR), formally known as MicroStrategy, which trades at a premium to its underlying bitcoin (BTCUSD) holdings. That plan can work so long as bitcoin keeps rising in value.
-Steve Goldstein
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