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A former editor of mine told me that among the arcane, legal jargon-filled SEC filings, there was a wealth of great articles on the “risk factors” companies must disclose in order to do business. .
This section is a treasure trove of all the nightmares that keep executives up at night. And its Kafkaesque blend of absurdity, creativity, and bureaucracy could grab headlines.
Especially when one of the key players is a former U.S. president.
This week, shares of Trump Media & Technology Group (TMTG, trading under the ticker DJT) fell 21% on Monday as investors were hit with an SEC filing filled with two eye-catching risk factors. These include significant operating loss disclosures and President Donald Trump's broad exposure. reputation.
As this week's chart shows, claims were hit very hard.
“TMTG expects to continue incurring operating losses and negative cash flow from operating activities for the time being,” the filing states.
The company also said that “the focus of our offerings and President Trump's involvement may expose us to greater risks than typical social media platforms,” adding, “If President Trump's popularity declines, , the company's brand may suffer.”
The plunge in Trump Media stock after the filing also serves as a reminder to investors that what is said out loud always matters. Is the Trump media exposed to President Trump's reputation? you don't say
However, the company did So to speak, the market took notice!
In the pantheon of risk factors, SeaWorld might remind investors that its animals have killed people and could die again in the future. Or, in Virgin Galactic's version, his company's spaceships have killed and may kill others.
The more bizarre and complex a company is, the wilder the risk factors can be, as Uber warns that “criminals can use our app.”
Like many parts of the voluminous SEC filings, these disclosures contain language designed to help avoid litigation, comply with securities laws, and cover what management and boards know. It can be filled and formulaic.
But in the marketplace, things never just “go without saying,” no matter how obvious.
ethan wolfman He is a senior editor at Yahoo Finance and runs the newsletter. Follow him on Twitter @ewolffmann.
