Trump Eyes Stock Sale as Truth Social Hits Lows

As the date nears when former President Donald Trump may sell his shares in Trump Media & Technology Group (TMTG), many are closely watching how this move might affect the market. Trump, who holds a significant stake in TMTG—roughly 60% of the company—could offload some or all of his shares once the company’s lock-up period ends, though this might not be as lucrative a venture as it once seemed. TMTG is the parent company of Truth Social, a conservative social media platform that was introduced as an alternative to mainstream platforms, which Trump and his supporters have criticized for alleged bias. The company trades on the Nasdaq under the ticker $DJT, Trump’s initials, but its stock price has recently hit record lows, making the potential sale far less of a windfall than it could have been earlier in the year.

Trump Media went public in March 2024 through a reverse merger with a special-purpose acquisition company (SPAC), a process that took 29 months to finalize. SPACs are created for the sole purpose of merging with a private company, allowing that company to go public without going through the traditional initial public offering (IPO) process. While this allowed TMTG to bypass some of the challenges associated with an IPO, the process was not without its difficulties. The company faced several issues during the 29-month journey to its public debut, including insider trading convictions and accounting discrepancies.

When TMTG finally went public on March 26, 2024, it triggered what is known as a lock-up period. This is a standard practice for newly public companies, designed to prevent early investors and major shareholders from immediately selling their shares and causing a sudden drop in stock prices. During the lock-up period, shareholders who own 5% or more of the company or serve in a high-level management role are prohibited from selling their shares until a specific date, typically a few months after the company’s public debut. For TMTG, the lock-up period is set to end soon, and several factors will determine when Trump will be allowed to sell his shares.

According to TMTG’s prospectus, there are three conditions under which the lock-up period will expire: first, the conclusion of the first six months of DJT stock trading as its own entity; second, if Trump Media shares trade above $12 for 20 out of 30 trading sessions, starting on August 23; or third, a transaction like a merger, in which all shareholders are offered the opportunity to trade in their Trump Media holdings at the same price. As of Friday, September 15, the stock was trading at around $17, meaning the first possible date for Trump to sell his shares could be September 19, provided the stock price stays above the $12 threshold. If the stock price fails to meet this condition, the latest Trump would be able to sell is September 25, which marks the end of the six-month lock-up period.

What remains unclear is whether Trump will actually sell his shares when eligible, and if so, how much of his stake he would choose to offload. The company’s prospectus includes a note indicating that, as a presidential candidate, Trump might divest his interest in Truth Social, though it does not specify how much he would sell. Additionally, the prospectus warns that the sale of Trump’s shares could increase volatility in TMTG’s stock price. The company cautions that if a large number of restricted shares are sold, the market price could fall. Nevertheless, a Trump Media spokesperson stated last month that there is no indication Trump plans to sell his shares.

The logistics of such a sale could also pose challenges. Selling a significant portion of Trump’s holdings may not be as simple as it sounds, according to Boston College law professor Brian Quinn. He explained to Bloomberg that regulatory restrictions might make it difficult for Trump to sell a substantial chunk of his shares, even after the lock-up period ends. Moreover, in any stock transaction, there must be buyers on the other side of the trade, which might prove difficult given the stock’s recent performance and public perception of the company.

One of the most surprising aspects of TMTG’s stock performance is just how much its value has dropped since its March debut. The stock price has fallen by about 80% from its March high of $79 and is down 60% from its July peak of $46. This significant decrease has wiped billions off of Trump’s net worth. As of Friday, his wealth was estimated at $3.8 billion, a steep drop from nearly $8 billion in the spring. However, even with these losses, Trump remains far wealthier than he was before DJT’s public listing, when his fortune was valued at $2.3 billion. His majority stake in the company has contributed to his financial standing, despite the stock’s recent decline.

TMTG’s stock, which has often been viewed as a proxy for Trump’s political prospects, has seen steady declines in recent weeks as the lock-up period expiration approached. The company’s market value was around $3.4 billion as of Friday, down from nearly $10 billion at its peak in May. Experts have suggested that the company may still be overvalued, given its weak financials. During the most recent quarter, TMTG posted a $16 million loss on sales of just $837,000, a stark contrast to other social media companies like Reddit, which has a market cap of $9.3 billion and reported a $10 million loss on $281 million in sales for the same period.

As the date when Trump can sell his shares draws closer, all eyes are on how he will navigate this potential sale. While the stock’s recent decline has taken much of the shine off what was once a highly anticipated event, the outcome could still have significant implications for TMTG, Truth Social, and Trump’s financial future.