Former President Donald Trump is about to face a major decision that could shake up the financial world and his fortune. By the end of September, Trump will be free to 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 in Trump Media, a stake valued at 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 these shares because of a lockup agreement – a rule that prevents company insiders from selling their stock right after the company goes public. But that restriction is set to end in late September.
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If Trump decides to sell, it could have major consequences. For one, the stock price might plummet. Financial experts are already worried that if Trump dumps his shares, there might not be enough buyers willing to snap them up, which could cause the stock to drop even more.
As Steve Sosnick, Chief Strategist at Interactive Brokers, pointed out, the overall stock market has been doing well, but Trump Media’s stock has been trending downward. It closed at $21.42 recently, its lowest since going public. "The rising tide hasn't lifted that boat," he said.
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Why is this happening? Trump Media's fortunes are closely tied to Trump's reputation and popularity. As the 2024 election heats up, Trump's standing in the polls has taken a hit after Kamala Harris took the lead as the Democratic nominee.
Matthew Tuttle, CEO of Tuttle Capital Management, didn't mince words, telling Politico that Trump has “stepped on just about every rake he possibly could” since his acceptance speech at the Republican National Convention. This has been “hammering the stock.”
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According to its latest earnings report, the company is having a tough time financially, 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 boost the company's stock and do a complete 180.
Investors are worried that Trump might sell his shares to cover his growing legal bills or fund his campaign. But selling such a large stake could flood the market with too many shares, pushing the price down further. And with Truth Social not generating much revenue compared to bigger platforms like X (formerly Twitter) and Facebook, Trump Media's sky-high valuation doesn't match its actual financial performance.
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Trump hasn't said what he plans to do once he's free to sell his shares, and his team isn't giving any hints. 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, which gives it some breathing room.
For now, all eyes are on Trump as he prepares to make a decision that could affect not just his fortune but also the future of his media empire and the investors who have big bets on him.
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