Truth Social's biggest investors can now dump their stock — and trigger a fire sale
Trump Media's top investors can now sell their shares if they choose.
That includes Donald Trump himself, though he has said he won't sell.
But if any investors start dumping their shares, it could start a firesale.
Donald Trump and other top investors are now eligible to sell their shares in Trump Media.
And if any do, it could mean even harsher stock losses for the former president's media business.
As part of a "lockup agreement," which is common practice in initial public offerings, Trump and other big shareholders have been barred from selling their shares in Trump Media, which owns Truth Social, for 180 days after the entity first began trading on the Nasdaq in March under the ticker DJT.
But that countdown clock ran out at market close on Thursday. And now, Trump could get a potentially huge payday if he sells, which could happen as soon as Thursday evening in after-hours trading. Or, other investors could dump their stock and plummet the company even deeper than its recent lows.
The lockup period, as explained in the company's regulatory filings, was scheduled to end on September 25, but because certain conditions were met, that period ended early.
Those conditions were that the share price needed to remain above $12 for 20 trading days within the 30-day period that began on August 23.
DJT shares have plummeted nearly 60% in the last six months, reaching the lowest point of around $14 per share on Thursday afternoon.
But, Trump has insisted he has no plans to sell.
"No, I'm not selling. No, I love it," Trump said during a press conference in California last Friday. That sent shares briefly skyrocketing, though they had wiped out the gains within hours.
Trump owns almost 60% of the company, and with the company's current valuation at around $3.1 billion, that means his stake totals just under $2 billion, according to Yahoo Finance.
His stake in the company makes up more than half of his total net worth, according to Forbes, which estimates Trump is worth about $3.8 billion.
But just because Trump says he's not going to sell, that doesn't mean other top investors won't.
In fact, two shareholders, ARC Global Investments II and United Atlantic Ventures, have already said they plan to sell 18 million shares as soon as Thursday, FastCompany reported. Others could jump on the bandwagon.
And any big investor offloading their shares is bad news for the company. In an SEC filing, Trump Media explains that if a large shareholder even indicates plans to cash out, it could negatively affect the share prices.
"These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price" of the stock, the filing says.
There's also the matter of Trump not wanting to cash in his holdings with DJT stock at record lows. In recent months the share price has been correlated with Trump's polling numbers, so any sort of recovery in election odds could lead to a stock rebound — and a more attractive payout package.
Still, Trump could probably use the money right now.
Earlier this year, Judge Arthur Engoron ordered Trump and executives at the Trump Organization to pay out $454 million plus interest in their New York civil fraud trial. So far, Trump has paid $175 million for an appeal bond, but if he loses his appeal, he'll be on the hook for hundreds of millions more.
On top of that, Trump had already burned through $100 million in lawyer's fees by March this year, according to a report by The New York Times.
Trump Media has had a tumultuous ride since entering the public market. With help from meme stock mania, the company's stock soared to $70 a share when it first went public, shooting Trump Media's market cap to $9 billion and raising the Republican nominee's net worth to $7 billion.
The company boasted an eye-watering valuation despite reporting paltry earnings and high expenditures.
But Trump Media's stock has been in free-fall ever since. And although Trump insisted he won the debate against Kamala Harris, the market resoundingly reacted as if he lost, making it ultimately responsible for DJT's last leg down to record lows.
Read the original article on Business Insider
