Trump Media Stock Falls to New Low Ahead of Lockup Expiration

Shares of Trump Media closed at a new record low on Wednesday, falling to $15.64, a significant drop from the previous day’s close of $16.14. This marks the second consecutive day the stock has hit a record low, just ahead of the expiration of the lockup period set to end on Thursday. The lockup period has prevented major shareholders, including former President Donald Trump, from selling their stakes in Trump Media & Technology Group Corp., the parent company of Truth Social.

As the lockup period nears its end, Trump and other large shareholders are poised to sell their shares, but Trump has stated he will not divest his holdings. The expiration of this lockup period allows Trump, who holds approximately 60% of Trump Media’s shares, to offload his stake. This significant event comes after Trump Media’s stock price has experienced considerable volatility.

According to a Securities and Exchange Commission filing, the lockup period for Trump Media can conclude in one of three scenarios: the completion of the stock’s initial six months of trading, Trump Media shares trading above $12 for any 20 out of 30 trading sessions starting August 20, or a transaction that permits all shareholders to sell their shares at the same price. With the stock trading below the $12 mark, the end of the lockup period is confirmed for September 19.

The value of Trump’s stake, which amounts to 114.75 million shares, has decreased markedly. As of Wednesday’s close, the value of his holdings had dropped from $2 billion on Friday to $1.7 billion. This decline reflects a broader trend, with Trump Media shares losing 80.2% of their value since peaking at $79.38 on March 25. The sharp drop in stock price underscores the significant challenges faced by the company.

In a related development, a Delaware court ruled in favor of Patrick Orlando, an early investor in Trump Media, on Tuesday. The court’s decision found that Trump Media had breached its contract with Orlando, resulting in an additional award of approximately 800,000 shares to him. This ruling contributed to a 6.6% decline in Trump Media shares, adding to the stock’s ongoing struggles.

Since Trump Media went public through a reverse merger with a special purpose acquisition company (SPAC) in March, its stock has experienced substantial fluctuations. The initial lockup period restricted certain shareholders from selling their shares, and the earliest possible end date for this restriction was set for September 19, contingent upon the share price maintaining a level above $12. However, with the stock’s recent decline, the expiration of the lockup period is unlikely to alleviate the downward pressure on the stock.

The volatility of Trump Media’s stock has been notable throughout Trump’s presidential campaign. The shares have seen both significant increases and decreases in response to political events. For instance, the stock surged by as much as 13% following a debate between Trump and President Joe Biden but dropped 10% after a debate with Vice President Kamala Harris. These fluctuations reflect the broader uncertainty and market reactions to Trump’s political activities.

Despite the recent turmoil, Trump’s net worth remains substantial. As of the latest estimates, Trump’s net worth stands at $3.9 billion, a notable decline from the $8 billion valuation he achieved when Trump Media went public. His wealth, which had seen a sharp increase from about $4.1 billion at the time of the company’s public debut, has diminished alongside the struggles of Trump Media’s stock.

The end of the lockup period represents a critical juncture for Trump Media and its shareholders. While Trump has committed to retaining his shares, the broader market dynamics and legal challenges facing the company continue to exert pressure on its stock price. The coming days will be crucial in determining the future trajectory of Trump Media’s shares and its overall market performance.

In summary, the recent drop in Trump Media shares to a record low, coupled with the legal challenges and market volatility, highlights the complex and often unpredictable nature of investing in companies linked to high-profile political figures. The expiration of the lockup period will be a significant event, potentially affecting the stock’s future movement as major shareholders, including Trump, navigate their investment strategies.