Donald Trump is in need of a large payday to cover his legal expenses and presidential campaign, but he can’t tap into his Truth Social stock. A minimum of not quite yet.
In late March, the previous president’s social media company began trading on Nasdaq when Trump Media & Technology Group. Corp. merged with a blank-check company called Digital World Acquisition Corp. Truth Social launched in February 2022 after Trump was banned from Facebook and X as a consequence of the Jan. 6, 2021 rebel on the Capitol. While he’s since been reinstated on each platforms, he’s stuck to his own although his company isn’t performing in addition to when it first launched.
Since its inception, Truth Social’s share price has largely plummeted. After soaring to $57.99 per share at launch, it’s value just $19.60 per share, valuing the corporate at just over $3.8 billion. Meaning Trump’s payday—if he chooses to dump his majority stake—might be much smaller than anticipated earlier this yr.
“Truth Social is tanking since it is actually a meme stock,” Robert R. Johnson, a finance professor at Creighton University and creator of The Tools and Techniques Of Investment Planning, Strategic Value Investing and Investment Banking for Dummies, told Fortune. “The stock price of Truth Social is unconnected to the truth of the financials of the firm. In the primary quarter of 2024, the firm lost $327 million on revenues of only $770,500. These aren’t numbers that remotely support the present stock price, much less the atmospheric values—nearly $80—that the stock hit in late March.”
How much Truth Social stock does Trump own and when can he sell it?
Trump owns a $2.3 billion stake in Trump Media & Technology Group, which trades as under ticker DJT (also his initials), but he can’t liquidate any of it until Sept. 25, in keeping with SEC filings. That’s resulting from a lock-up period rule, which prevents insiders from immediately selling once an organization goes public.
But Trump could dump his shares five days if Trump Media’s share price equals or exceeds $12 for any 20 trading days inside a 30-day trading period starting Aug. 22. If the stock price stays regular, meaning Trump’s restrictions could lift as soon as Sept. 20.
While Trump isn’t capable of start selling his shares yet, another insiders have began shedding their stake in the corporate. Trump Media’s chief financial officer and treasurer, Phillip Juhan, disclosed last week he’s selling $1.9 million value of stock, in keeping with SEC filings. Trump Media’s general counsel Scott Glabe, chief operating officer Andrew Northwall, and chief technology officer Vladimir Novachki each also sold shares, in keeping with Aug. 22 SEC filings. Devin Nunes, a former Republican congressman and Trump Media’s CEO and president, also sold off $632,000 value of stock last Thursday.
While it’s not necessarily unusual for executives to sell a few of their stake in an organization, selling at a loss—which they did—might be an indicator for trouble ahead.
“Since selling a stock at a loss is painful, an investor who sells at a loss will need to have particularly negative information,” Peter Kelly, a finance professor on the University of Notre Dame, wrote in a 2018 paper published by Oxford Academic. “And what you see is when stocks are sold at a loss, it predicts negative returns.”
Would Trump really sell his DJT shares?
While Trump continues to be sitting on a pleasant chunk of change, it’s somewhat unlikely that he’d sell his entire stake in the corporate for some money flow. That’s largely since it could find yourself tanking the stock even further.
“Speculators in Truth Social would likely see a large loss in wealth as Trump sells off a few of his position within the firm,” Johnson said.
And that wouldn’t be in Trump’s interest since many shareholders are also his political supporters who could get burned by a large sell-off.
“If Trump were to sell a lot of shares and the stock price tanks, to a point he could be burning his own supporters who bought the stock,” Jay Ritter, a finance professor on the University of Florida’s Warrington College of Business, told CNN. “Politically, that won’t play out real well for him.”
While all eyes might be on Trump come late September by way of whether he’ll decide to sell any stock, the time to actually watch Trump Media stock might be across the time of the election.
“The case for speculating—note, I say speculating and never investing—in Truth Social is that Trump wins the presidency and the social media platform gains popularity and is capable of create a sustainable business model,” Johnson said. “The stock is under pressure as those prospects have dimmed with the recent surge in popularity of the Democratic ticket.” As of Friday, Democratic presidential nominee Kamala Harris held a slim margin over Trump, in keeping with a Wall Street Journal poll.
This story was originally featured on Fortune.com