Former President Donald Trump is facing a major decision that could shake up the financial world and his fortune. By the end of September, Trump can sell his entire stake in Trump Media & Technology Group, which owns his social media platform Truth Social. But what happens if he decides to cash out?
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Trump currently owns more than 114 million shares of Trump Media, a stake worth about $2.5 billion. That’s a big chunk of his estimated $4.3 billion net worth. Until now, he hasn’t been able to sell those shares because of a lockup agreement – a rule that prevents company insiders from selling their shares immediately after the company goes public. But that restriction is set to end at the end of September.
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If Trump decides to sell, the consequences could be serious. First of all, the stock price could crash. Financial experts are already worried that if Trump sells his shares, there might not be enough buyers willing to buy them, which could cause the price to fall even further.
As Steve Sosnick, chief strategist at Interactive Brokers, pointed out, the stock market is doing well overall, but Trump Media’s stock is trending lower. It recently closed at $21.42, its lowest since its IPO. “The tide has not lifted the boat,” he said.
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Why is this happening? The success of Trump Media is closely tied to Trump’s reputation and popularity. As the 2024 election heats up, Trump’s position in the polls has taken a hit after Kamala Harris took the lead as the Democratic candidate.
Matthew Tuttle, CEO of Tuttle Capital Management, was blunt, telling Politico that Trump has been “kicking the stock in pretty much every way imaginable” since his acceptance speech at the Republican National Convention, which has “driven the stock down.”
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According to its latest earnings report, the company is in financial trouble, losing over $16 million in just three months. It’s clear to almost everyone that Trump Media’s future depends on the 2024 election. If Trump wins the election, that alone could drive up the company’s stock price and make a complete turnaround.
Investors fear that Trump might sell his shares to pay his mounting legal fees or fund his campaign. But selling such a large stake could flood the market with too many shares and drive the price down further. And since Truth Social doesn’t generate much revenue compared to larger platforms like X (formerly Twitter) and Facebook, Trump Media’s astronomical valuation is disproportionate to its actual financial performance.
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Trump has not said what he plans to do if he can sell his shares, and his team is not offering any clues. Meanwhile, Trump Media is trying to expand its business, recently adding in-app streaming to Truth Social. The company says it has $344 million in cash and no debt, giving it some breathing room.
All eyes are currently on Trump as he prepares to make a decision that could affect not only his wealth but also the future of his media empire and the investors who have bet large sums on him.
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