Trump Media Shares Drop 6% Following Expiration of Sale Ban

Shares of Trump Media & Technology Group (TMTG) dropped by over 6% on Friday as the market opened, shortly after the expiration of a ban preventing former President Donald Trump from selling his shares in the parent company of Truth Social. Despite this, Trump maintained that he has no intention of offloading his stake in the company. The share price fell below $13.80 by 9:35 a.m., following a similar decline the day before, marking a third consecutive record low. The stock closed Thursday with nearly a 6% drop, further compounding concerns over the company’s stability.

The decline followed the expiration of a lockup period, a standard practice in public companies where key shareholders are restricted from selling their shares for a certain time after the company goes public. In TMTG’s case, the lockup prevented Trump from selling any of his approximately 60% stake. The ban was lifted on Thursday, as per a stipulation that required the company’s stock price to stay above $12 for at least 20 out of 30 trading days beginning on August 20. With the expiration of this lockup period, other shareholders with significant stakes or those in high-level management positions are now also allowed to sell their shares, which could lead to more market fluctuations.

Although Trump reiterated his commitment to holding onto his shares, the company has struggled in recent months. The stock price has dropped by over 18% this week alone, affecting the overall value of Trump’s holdings. His 114.75 million shares have lost considerable value, dropping from $2 billion just a week ago to $1.58 billion as of today’s share price. This significant reduction in value reflects the broader challenges facing TMTG.

The company’s stock has suffered an 81.4% decline since reaching a high of $79.38 on March 25. This dramatic drop has made TMTG the worst-performing stock on the Russell 1000 Index since early August, according to Bespoke Investment Group. The Russell 1000, which tracks the performance of the 1,000 largest U.S. stocks, has seen TMTG plummet to the bottom of the list. This steep decline signals deep concerns among investors about the company’s future, further exacerbating its market performance.

Even though the lockup period has expired, regulatory hurdles may still prevent Trump from easily selling his shares in the future, should he decide to do so. Bloomberg reported that Trump is likely to face significant difficulties due to ongoing regulatory scrutiny from the Securities and Exchange Commission (SEC). These complications could add to the market volatility surrounding TMTG, as potential investors might be wary of investing in a company facing such scrutiny.

TMTG’s journey as a publicly traded company began in March when it debuted on the stock market, triggering the lockup period. Several conditions could have led to the end of this ban, including the stock price staying above a certain threshold for a specified period, or a merger that would have allowed shareholders to trade their holdings. The lockup expired after the stock price remained above $12 for the required number of trading days. Despite this, the lifting of the ban has not led to any significant rally in trading activity, partly due to the company’s ongoing struggles and regulatory issues.

The decline in TMTG’s stock price has also dealt a significant blow to Trump’s personal net worth. His estimated wealth has dropped from over $8 billion earlier this year to around $3.8 billion today. The dramatic reduction is largely attributed to the fall in TMTG’s stock value, which has erased over $106 million from Trump’s fortune in a single day on Thursday. When TMTG first went public, Trump’s net worth surged, but the company’s ongoing challenges have raised questions about whether it can recover the lost value.

As more shareholders become eligible to sell their shares following the lockup expiration, TMTG may face further stock volatility. While Trump has indicated that he will not sell his stake, the company’s regulatory issues and declining market performance make its future uncertain. With the stock price continuing to trend downward, Trump Media & Technology Group faces significant challenges ahead, leaving both investors and analysts questioning its long-term prospects.