Trump’s Stock Lock-Up Set to End, but He Declares No Sale

The lock-up period preventing former President Donald Trump from selling his shares in Trump Media & Technology Group (TMTG), the parent company of Truth Social, is approaching its end. The expiration of these restrictions is anticipated this Thursday afternoon, potentially unlocking a substantial amount of stock for Trump. Despite this, Trump has asserted that he will not be selling any of his shares. On Friday, he emphasized his commitment to keeping his stock, stating, “I’m not selling, I love it,” during a press conference.

As of Thursday morning, Trump Media shares were trading around $14.80 in premarket, surpassing the $12 threshold needed for the lock-up period to end. If the shares close at or above this price, Trump will be free to sell his holdings. Trump owns approximately 60% of Trump Media’s shares, which are listed under the ticker symbol $DJT on the Nasdaq. The company went public on March 26 through a reverse merger with a special-purpose acquisition company (SPAC), concluding a lengthy 29-month process that was fraught with challenges, including insider trading convictions and accounting errors.

The March 26 public debut triggered a standard lock-up period, a common practice for newly public companies. During this time, major shareholders and executives are restricted from selling their shares until a designated date. For Trump Media, the lock-up period would end when one of several conditions is met: if the stock trades above $12 for 20 of 30 trading sessions starting August 23, or by the end of the initial six-month trading period. Thus, the earliest Trump’s shares could become tradable is at the close of today’s market, assuming the stock remains above the $12 mark. The latest possible date for the end of the lock-up period is September 25, which marks the end of the six-month period following DJT’s direct listing.

Despite Trump’s clear stance on not selling, uncertainties persist. It remains unclear how easily he could sell his shares if he decided to change his position or what impact such a sale might have on Trump Media’s stock value. The company’s prospectus mentions that, as Trump is a presidential candidate, he might divest his interest in Truth Social, but only under the conditions of the lock-up period. There is concern that any significant sale could increase volatility in TMTG’s share price or cause a decline in its market value, particularly if other restricted shareholders also choose to sell. A Trump Media spokesperson has indicated there is no indication that Trump intends to sell his shares. However, logistical challenges could arise, as Brian Quinn, a professor at Boston College, noted that selling a large block of shares could be difficult due to regulatory constraints even after the lock-up period expires. Furthermore, every stock transaction requires a buyer, which could complicate any large-scale sale.

The stock price of Trump Media has experienced a dramatic decline from its high of $79 in March, falling by around 80%. It has also dropped 60% from its peak of $46 in July. This decrease has led to a significant reduction in Trump’s net worth, which was $3.9 billion as of Wednesday’s close, down from nearly $8 billion in the spring. Despite this substantial drop, Trump’s wealth remains notably higher than before the public debut of DJT, which granted him a majority stake in the company. His net worth was estimated at $2.3 billion just before the company went public.

Initially, Trump Media’s stock price was viewed as a reflection of Trump’s political prospects. As his chances in the upcoming presidential election fluctuated, so did the stock’s value. Recently, the stock has continued to decline as the expiration of the lock-up period neared and Trump re-engaged with X (formerly known as Twitter), a competitor to Truth Social. As of Wednesday’s close, Trump Media’s market value was approximately $3.2 billion, a steep drop from its nearly $10 billion peak in May. Analysts suggest that the company may still be overvalued, considering its recent financial performance, which included a $16 million loss on just $837,000 in sales for the most recent quarter. For comparison, Reddit, another social media company that went public in March, has a market cap of $10.6 billion and reported a $10 million quarterly loss on $281 million in sales. The end of the lock-up period will be closely scrutinized for its potential impact on Trump Media’s stock and any broader implications for the market and Trump’s financial strategy.