Trump Media Clears All 2024 $1.95b Stock Gains
Donald Trump is getting closer to the day when he might sell his shares in Truth Social’s parent company, Trump Media and Technology Group (TMTG). This has raised some worries about a possible sell-off that could negatively impact the meme stock.
Currently, Trump’s stake in TMTG is valued at around $1.95 billion. This substantial amount could potentially help him deal with his increasing legal expenses.
When Donald Trump agreed to a reverse merger with Digital World Acquisition Company (DWAC) on March 25, he committed to a six-month lockup period. This meant he couldn’t sell any of his 115 million shares right away.
Trump holds a 59% stake in TMTG, and any large sale could significantly impact the stock’s value. The lockup period is set to end in three weeks, and investors are starting to get nervous.
Trump’s financial situation seems tight. He’s been selling various items like Trump-themed sneakers, “God Bless the USA” Bibles, and is now offering a piece of the suit he wore during his first debate with Joe Biden. This is part of a promotion where buyers of $1,500 worth of digital Trump trading cards can also get a collectible piece of that suit.
On Wednesday, TMTG shares fell 6%, closing just below $17. This wipes out all gains for the year, while the S&P 500 has risen 16% over the same period.
TMTG officials did not respond when approached for a statement, while Trump left a Fortune request for comment both on Truth Social and X unanswered.
Loss-making TMTG still valued at 1,000 times its revenue
TMTG has seen a dramatic drop in value, losing 80% since it peaked at $79.38 on March 26, the day it first traded under the DJT ticker. At that peak, Trump’s personal stake was valued at nearly $9.11 billion.
The stock’s decline may not be over. Recently, CEO Devin Nunes and CFO Philip Juhan sold $2.5 million worth of shares, which has further shaken investor confidence.
Despite having a market cap of $3.4 billion, TMTG is trading at over 1,000 times its annual revenue. For the first half of the year, the company reported just $1.6 million in sales and continues to struggle with significant cash flow issues.
Wall Street analysts generally steer clear of TMTG, viewing it more as a “meme stock” than a serious investment opportunity. The company doesn’t provide key metrics like the number of active, monetizable users, making it difficult for analysts to cover.
Originally, the stock was seen as a bet on Trump’s reelection. However, with recent polls showing a tighter race in key battleground states and Kamala Harris gaining traction, the outcome is now far from certain.
November election outcome key to TMTG’s stock price
Donald Trump has found himself returning to Twitter (now rebranded as X), where his follower count is exponentially larger, giving him access to a much broader audience of potential voters. With over ten times the followers he has on Truth Social, this move raises questions about the value of his own platform when his content is easily accessible on bigger competitors.
For Truth Social users, this diminishes its unique appeal. Why go to Truth Social if you can get the same content on a more popular platform?
Looking ahead, if Trump were to lose the upcoming election, the relevance of Truth Social could take a significant hit. His political influence would likely wane, leading to a diminished interest in the platform that has been closely tied to his public persona.
John Rekenthaler, vice president of research at Morningstar, told Quartz that investing in TMTG, Truth Social’s parent company, is essentially an investment in Trump’s personal brand. He added, “But he’s not going to have a brand if he loses a second straight presidential election.”
There’s even a possibility that Trump could sell his TMTG shares by September 20, just a few days earlier, as long as the stock price doesn’t drop below $12. However, any such sale could come with legal complications, as his son, Don Jr., serves as a director of the company and has access to insider information, including its third-quarter financials.
The best outcome for TMTG investors may lie in Trump finding a strategic buyer to acquire his stake in the company entirely. Without that, the future of Truth Social—and by extension, TMTG—remains uncertain.
This story was originally published on Fortune.com.