Trump Set To Receive BILLION-Dollar Payday
After grappling with endless legal challenges, former President Donald Trump is now receiving positive updates. As he acquires an additional 36 million shares in Trump Media & Technology Group, Trump's fortune is poised to rise, potentially exceeding a net worth of more than $1 billion.
The substantial financial gain stems from an "earn out" provision in the merger agreement that formed Trump Media & Technology Group, the parent company of Truth Social, a social media platform. According to CNBC, this provision, contingent on the company's stock performance, grants Trump more shares if specific criteria are met.
For Trump to qualify for the bonus shares, Trump Media shares, traded under the ticker DJT, must maintain a minimum price of $17.50 for a predetermined period. As of the latest trading session, the stock comfortably surpassed this threshold, ensuring Trump's receipt of the additional shares.
With these newly acquired shares, Trump's stake in the company would surpass 114 million shares in total, cementing his status as the primary shareholder with nearly 65% of all outstanding shares.
CNN estimates that Trump's ownership stake in the firm would be valued at approximately $4 billion based on the current stock price of $35 per share.
Meanwhile, in the ongoing criminal hush money trial of former President Donald Trump, taking place in Manhattan, New York, prosecutor Matthew Colangelo delivered opening remarks on Day 5 of the proceedings.
Despite the financial windfall, Trump Media continues to face challenges in profitability; the company reported significant losses and minimal revenue last year.
Analysts have labeled the company as "overvalued" due to the disparity between its market value and financial performance, predicting price volatility. Initially surging to around $80 per share following its public debut through a merger with Digital World Acquisition Corp., the company's shares have since experienced a notable decline.
Fortune reported:
Few stocks have been as volatile as Trump Media & Technology Group in recent weeks, but if shares can avoid a massive plunge for the next two trading days, Donald Trump’s personal fortune is set to leapfrog once again.
Trump stands to receive another 36 million shares of the company as long as shares stay above $17.50 through the end of trading Tuesday. (As of midmorning Monday, they stood at just under $36.)
Per the company’s SEC filings, the company can issue additional shares to those who had a pre-merger interest in Trump Media, including Trump himself, if the average price per share stays above $12.50 for at least 20 of the first 30 days it is traded. Tuesday will mark the 20th day of trading for the company and it has stayed well above that figure, even with the extreme ups and downs.
If the price stays above $17.50, which it has easily done, that would trigger an earning out of 40 million shares. Trump would be eligible to receive 90% of those—or 36 million. At current prices, that would be valued at over $1.25 billion, given today’s price.
At present, Trump would not be able to cash those shares in, due to lock-up restrictions, though the company’s board does have the power to waive those. As he is the company’s largest shareholder, though, any significant sale of shares by him could cause the company’s valuation to fall even further. (With this expected additional payout, he will own 114.75 million shares of the company, 65% of its total stock.)
Analysts are skeptical of Trump Media, saying the company is overvalued and the stock price does not accurately reflect the company’s fundamentals.
Trump Media lost $49 million in the first nine months of last year, when it brought in just $3.4 million in revenue. In the past month, the company’s market cap has fallen from $10 billion to $4.78 billion. Shares were down 4% in midmorning trading Monday.
There are both practical and legal restrictions on Trump’s newfound fortune. When and if Trump decides to sell, the shares’ eventual market value may be impacted by the lock-up period that prohibits them from being sold for several months following the merger.
Furthermore, the probable overvaluation of Trump Media and the volatile stock price indicate that the former president’s payoff may not materialize into marketable assets anytime soon. It will be intriguing to observe how Trump’s growing fortune will affect his campaign and political clout as he prepares for another presidential bid.