Donald Trump is on the Verge of Another $1 Billion Truth Social Windfall
Former President Donald Trump is on the brink of a significant financial gain, as his media venture, Trump Media & Technology Group, inches closer to meeting a key milestone related to its social media platform, Truth Social.
If Trump Media’s share price remains stable until the closing bell on Tuesday, Trump stands to acquire an additional 36 million shares in Truth Social. This development comes despite the company’s financial losses and the relatively small size of Truth Social.
At current market prices, these additional shares could be valued at around $1.3 billion, further bolstering Trump’s net worth. The former president’s wealth has experienced fluctuations since Trump Media’s recent initial public offering (IPO), with the company’s stock being described as a “meme stock on steroids.”
While Trump Media’s share price has declined since its peak in March, it still exceeds certain performance thresholds outlined in the merger agreement. These thresholds dictate that additional shares can be issued to pre-merger shareholders if specific price metrics are met over a certain period.
Trump’s dominant position in the company means he would receive the majority of these earnout shares, potentially increasing his stake in Truth Social to 65% of the total outstanding shares.
However, experts caution that Trump Media’s stock remains highly volatile and may be overvalued based on fundamental metrics. Despite its high share price, the company’s price-to-sales ratio far exceeds that of its peers in the social media industry.
Moreover, there are legal and practical barriers that could prevent Trump from cashing in on his stock holdings in the near future. Lock-up restrictions prevent insiders from selling their stock for several months following the merger, and selling a significant portion of his stake could trigger a sharp decline in the share price.
The company’s recent efforts to prevent short selling indicate concerns about the stock’s volatility and suggest that Trump Media is closely monitoring its share price.
Overall, while Trump’s potential windfall with Truth Social appears promising on paper, the future trajectory of the company’s stock remains uncertain amidst ongoing market fluctuations and regulatory scrutiny.
