Zinger Key Points
- Donald Trump owns a sizable stake in Trump Media & Technology Group.
- The former president could unlock additional shares soon based on the current share price and time-based and price milestones.
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Editor’s Note: The headline and lede of this article have been updated to highlight the value of the 36 million DJT shares Donald Trump may receive.
Former President Donald Trump stands to gain $1.26 billion worth of additional shares in Trump Media & Technology Group DJT if the company meets certain performance-based milestones, according to details from the original SPAC merger agreement with Digital World Acquisition Corporation.
This potential windfall comes as part of an earnout provision that could see Trump’s stake in the company increase significantly.
What Happened: The public debut of Trump Media & Technology Group (TMTG) has been a major event in the stock market in 2024, initially seeing shares soar before significantly dropping a month later. Despite the fluctuating share price, Trump could enhance his wealth through performance-based shares.
If the company’s shares maintain a weighted average price of $12.50 or higher for 20 trading days within a 30-day period starting March 25, Trump will receive the additional shares, as reported by CNN.
To achieve the full earnout, the share price must reach at least $17.50 during the same timeframe. This pricing event is set to conclude on April 23, given the March start date.
Currently, the 36 million shares Trump could acquire are valued at $1.26 billion, based on a share price of $34.98 at the time of writing. This acquisition would increase Trump’s total holdings to 114.75 million shares, representing approximately 65% of the company’s total shares.
However, Trump's ability to capitalize on these shares could be delayed due to lock-up restrictions, which prevent him from selling his shares immediately.
Related Link: Trump Hush Money Trial Has 12 Jurors: Here Are The 7 Men, 5 Women To Decide Former President’s Fate
Why It's Important: Last week, shares of Trump Media & Technology Group traded higher after the company told shareholders ways to prevent their shares from getting loaned out and being loaned to short sellers.
The company also sent a letter to the Nasdaq on potential short selling of its stock.
"As you know, ‘naked' short selling – selling shares of a stock without first borrowing the shares deemed difficult to locate – is generally illegal pursuant to Securities and Exchange Commission Regulation SHO," TMTG CEO Devin Nunes said in a letter to the Nasdaq.
The letter comes as reports show TMTG as one of the most expensive stocks to short.
"Data made available to use indicate that just four market participants have been responsible for over 60% of the extraordinary volume of DJT shares traded: Citadel Securities, VIRTU Americas, G1 Execution Services, and Jane Street Capital," TMTG said in a filing.
Citadel shared a response to Benzinga on the accusation by Nunes and TMTG.
"Devin Nunes is the proverbial loser who tries to blame ‘naked short selling' for his falling stock price. Nunes is exactly the type of person Donald Trump would have fired on The Apprentice," a spokesperson for Citadel told Benzinga.
The comments on short selling come around the time of the share price milestones needing to be hit, and after the company recently registered to sell shares in the future, including the ones owned by Trump.
Prior to the earnout, Trump owns a 57.6% stake in the company with 78.75 million shares.
Trump's take in the company was valued at between $5.58 billion and $6.25 billion as the company went public and shares traded between $57.25 to $79.38 in their market debut.
Trump's stake in the company is currently worth around $2.75 billion, not including the earn-out. Together, the 114.75 million shares would be worth close to $5 billion today.
The $5 billion stake could get closer to getting Trump back on the Bloomberg Billionaires Index of the 500 richest people.
Based on the filing of selling shares in the future, Trump could be looking to cash out a portion of his ownership stake to help pay court fines and fees and to fund his 2024 presidential election campaign.
As previously reported, Trump could maintain control over the company if he sells a majority of his shares thanks to a structure put in place before the merger.
Shares of Trump Media & Technology Group could continue to be volatile after the share offering filing and as Trump’s hush money case captures headlines for the next six weeks.
DJT Price Action: Trump Media & Technology Group shares are down 4% to $34.98 on Monday versus a 52-week trading range of $12.40 to $79.38, which includes the period prior to the SPAC merger being completed.
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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