Donald Trump, the former president, faces a critical decision regarding his shares in the Trump Media & Technology Group (TMTG), the parent company of Truth Social. As the largest shareholder with 57% of the company, Trump’s 114.5 million shares are valued at $1.85 billion, comprising a significant portion of his $3.7 billion net worth. The lockup deadline for Trump, which restricts insiders from selling stock in the newly public company, will expire on Sept.
25 at the latest, or potentially as early as Sept. 19 if the stock remains above $12. Since Aug.
22, it hasn’t dropped below $15, making an early end to the lockup likely. Trump declared at a press conference on Sept. 13 that he is “not selling,” which resulted in the stock jumping 27%, closing at $17.97.
However, selling too many shares too soon could trigger a market plunge, devaluing his remaining shares. TMTG, despite its $3.1 billion market cap, faces financial difficulties. Revenues totaling $1.6 million in the first half of 2024 were down 30% year-over-year, and the company posted a net loss of $344 million.
Additionally, TMTG is embroiled in lawsuits and has admitted to financial misstatements without a clear resolution timeline.
Trump’s TMTG shares decision deadline
Insiders at newly public companies often work with their boards to develop incremental sale plans post-lockup period to avoid market chaos.
A sudden sell-off by Trump could lead to a sharp decline in stock value, greatly impacting retail investors and himself alike. Yet, holding onto the shares presents a challenge given TMTG’s tenuous footing and the stock’s dependence on Trump’s personal influence rather than solid business fundamentals. To stabilize its finances, TMTG entered a $2.5 billion equity purchase agreement with Yorkville Advisors, a New Jersey investment firm.
The agreement allows Yorkville to buy new shares at 97.25% of their market price. Yorkville, however, has faced regulatory issues in the past, including fines from Italian and Swiss authorities. TMTG was founded after Trump left the White House, with inspiration from Wesley Moss and Andrew Litinsky, former contestants on The Apprentice.
Trump, banned from mainstream platforms post-Jan. 6, leveraged his brand to support the conservative alternative to Twitter. United Atlantic Ventures (UAV), a company established by Moss and Litinsky, received an 8.6% equity stake in TMTG.
Patrick Orlando’s Digital World Acquisition (DWAC), a special purpose acquisition company (SPAC), facilitated TMTG going public in March 2024. Now, Trump’s decision about his TMTG shares and the upcoming lockup deadline remains pivotal for the future trajectory of both the company and his own financial standing. The forthcoming decision by Trump and other insiders on whether to sell or hold will significantly impact Trump Media’s future and its share price stability, making it a critical moment for the company.
