As the former President Donald Trump’s lock-up period for his social media company, Trump Media & Technology Group (TMTG), rapidly approaches, there is speculation about the impact on his potential sale of shares in the company. Trump owns around 60% of TMTG, which is the parent company of Truth Social, a conservative social media platform. The company went public on March 26 through a reverse merger with a special-purpose acquisition company, however, the lock-up period restricts certain shareholders, including high-level management, from selling shares until a predetermined date.
The company’s latest prospectus filing with the Securities and Exchange Commission outlines three factors that could trigger the end of the lock-up period, allowing Trump to potentially sell his shares. This could happen as early as September 19 if TMTG shares remain above $12, though there is no guarantee with the current share price at $17. The latest possible date for Trump to sell would be September 25, marking the end of the opening six-month period of DJT’s direct public listing. The prospectus also highlights the potential impact of Trump selling his shares, warning of increased volatility in TMTG’s share price or a decline in the market price of the company’s common stock.
It is unclear whether Trump will sell his shares when eligible, or how much of his stake he would unload. The Trump Media prospectus notes that Trump may divest his interest in Truth Social, but a company spokesperson mentioned that there is no indication of Trump intending to sell his stock. However, logistics could be a challenge as regulatory restrictions exist even after the lock-up period expires, and a buyer would need to be on the other side of the trade. The declining share price of TMTG, down roughly 80% from its March high, has also impacted Trump’s net worth, which has decreased from nearly $8 billion to $3.8 billion.
Previously seen as a rough proxy that fluctuated based on Trump’s odds in the presidential election, TMTG’s stock price has steadily declined in recent weeks as the lock-up period expiration approached. The company’s market value is currently around $3.4 billion, down from a peak of nearly $10 billion in May. Despite this, experts suggest that the company may still be overvalued, as it reported a $16 million loss on $837,000 in sales during its most recent quarter. Comparatively, Reddit, another social media company that went public in March, has a market cap of $9.3 billion and reported a $10 million quarterly loss on $281 million in sales.
In summary, as the deadline for the lock-up period for Trump Media & Technology Group approaches, there is speculation about the potential impact on former President Trump’s shares in the company. With the possibility of being able to sell his shares as early as September 19 if certain conditions are met, the future of Trump’s stake in TMTG remains uncertain. The declining stock price and financial losses for the company have also impacted Trump’s net worth, highlighting the potential risks and challenges associated with his possible sale of shares. Despite uncertainties, the stock market continues to monitor this situation closely to determine the long-term implications for both Trump and TMTG as a whole.
