TLDR:
- Trump Media & Technology Group stock has experienced significant volatility since going public in March 2024
- Donald Trump owns about 60% of Trump Media, worth approximately $2.6 billion
- A lock-up period preventing insiders from selling shares is set to expire in September 2024
- The company’s valuation appears disconnected from its financial performance
- Trump’s potential sale of shares could impact the stock price and investor confidence
Donald Trump’s social media company, Trump Media & Technology Group, continues to experience stock price volatility as the expiration of a lock-up period approaches.
The company, which operates the Truth Social platform, went public through a SPAC merger in March 2024 and has seen wild swings in its share price since then.
Trump Media’s stock recently hit a new post-merger low of $21.33 per share before rebounding 15% to $24.60. This latest movement erased some recent losses, bringing the company’s market capitalization to $4.85 billion. However, the stock remains down about 58% from its debut price.
The former president owns approximately 60% of Trump Media, a stake valued at around $2.6 billion.
This represents more than half of Trump’s estimated net worth, according to Forbes.
A lock-up agreement currently prevents Trump and other company insiders from selling their shares. This restriction is set to expire on September 25, 2024, or potentially as early as September 20 if certain stock price conditions are met.
The approaching end of the lock-up period has raised questions about whether Trump will choose to sell any of his shares.
The former president has not indicated any plans to do so. Selling could provide Trump with funds to cover mounting legal expenses, including over $500 million in penalties from recent lawsuits.
However, a large sale could negatively impact the stock price and investor confidence in the company.
Trump Media’s valuation has puzzled many financial experts, as it appears disconnected from the company’s underlying business performance.
In the first half of 2024, the company reported just $1.6 million in revenue and lost $344 million, primarily due to paper losses on derivatives. Third-party trackers have shown stagnant user metrics for the Truth Social platform.
Instead, the stock has behaved more like a “meme stock,” with price movements often correlating to Trump’s political fortunes rather than company fundamentals.
For example, the stock surged over 30% following an assassination attempt on Trump at a campaign rally in July.
More recently, the share price has declined as polls have shown Vice President Kamala Harris, the Democratic nominee, gaining ground in the presidential race.
The company has acknowledged in SEC filings that a “substantial” sale of shares once the lock-up period ends could reduce the stock price. Trump Media also notes that its success is partially dependent on Trump’s popularity and reputation.
