The date on which former President Donald Trump is eligible to offload shares in his social media company is rapidly approaching—though when it finally comes, it’s likely to offer far less of a treasure than it was earlier this year.
Former President Donald Trump addresses the Economic Club of New York on Thursday.
Trump owns about 60% of all shares in Trump Media & Technology Group, the parent company of the conservative social media platform Truth Social, which trades on the Nasdaq stock exchange under the ticker $DJT, Trump’s initials.
Trump Media went public March 26 through a reverse merger with a special-purpose acquisition company, concluding a 29-month process of going public marred by headaches like insider trading convictions and accounting errors.
The March debut initiated what’s known as a lock-up period, a standard procedure for newly public companies in which certain shareholders, like those who own 5% or more of shares or who serve in a high-level management role, can’t sell shares until a predetermined date.
The company’s latest prospectus filing with the Securities and Exchange Commission outlines three factors that would trigger the lock-up period to conclude: The end of the first six months of DJT stock trading as its own entity, Trump Media shares trading above $12 for any 20 of 30 trading sessions beginning Aug. 23, or a transaction, like a merger, in which all shareholders have the opportunity to trade in their Trump Media holdings at the same price.
That means the earliest possible date Trump can sell is Sept. 19 if Trump Media shares remain above the $12 threshold, not a guarantee with a $17 share price Friday, and the latest his selling window would open is Sept. 25, the end of the opening six-month period of DJT’s direct public listing.
If Trump will sell when eligible, or how much of his stake he would unload. The Trump Media prospectus says “because President Donald J. Trump is a candidate for president, he may, subject to the Lock-up Period, divest his interest in Truth Social.” The company also warns “the sale…could have the effect of increasing the volatility in TMTG’s share price or the market price of TMTG common stock could decline if the holders of currently restricted shares sell them.” Despite the warning, a Trump Media spokesperson said last month there isn’t “any conceivable sign anywhere” Trump intends to sell his stock. Logistics also may be a challenge, as Boston College professor Brian Quinn noted to Bloomberg it may be “very difficult” for Trump to sell a major chunk of his shares given the regulatory restrictions that exist even after a lock-up period expires. And as for every stock transaction, someone needs to be on the other side of every trade.
Trump Media’s share price is down roughly 80% from its March record of $79 and 60% from its July peak of $46. That has wiped out billions of dollars from Trump’s net worth, which sat at $3.8 billion Friday, down from its near $8 billion level in the spring, according to Forbes’ calculations. Still, Trump is far richer than he was prior to DJT’s debut which awarded him a majority stake in the company, with his fortune estimated at $2.3 billion just ahead of the launch.
Previously viewed as a rough proxy that rose and fell as Trump’s odds to prevail in November’s presidential election ebbed and flowed, Trump Media stock has declined steadily in recent weeks as the expiration of the lock-up period neared and Trump returned to X, the rival social media site previously known as Twitter. The Truth Social parent’s market value was about $3.4 billion Friday, down from a near $10 billion peak in May, though experts suggest the company is likely still overvalued, considering it booked a $16 million loss on $837,000 in sales during its most recent quarter. Reddit, another social media company which went public in March, has a market cap of $9.3 billion and most recently reported a $10 million quarterly loss on $281 million of sales.