Former President Donald Trump’s anticipated windfall came as a result of a significant milestone for his social media venture, Trump Media & Technology Group, specifically its flagship platform, Truth Social. With the company’s stock, bearing the ticker symbol DJT, closing at $32.50 on Tuesday, Trump was on track to receive an additional 36 million shares as part of an “earnout” provision. This earnout clause, a common feature in mergers and acquisitions, rewards insiders if the stock maintains a certain price level for a predetermined period following the completion of a merger or acquisition.
The road to this financial milestone began when Trump Media & Technology Group went public on the Nasdaq exchange on March 26, facilitated by a Special Purpose Acquisition Company (SPAC) merger. The initial public offering saw an impressive surge in the stock’s price, reaching as high as $80 per share in its first week of trading. However, subsequent market volatility led to fluctuations in the stock price, with shares eventually stabilizing in the $30 to $40 range.
Despite the stock’s recent decline of 8 percent on Tuesday, the closing price remained comfortably above the required threshold of $17.50 per share for Trump to become eligible for the bonus shares. As the majority shareholder of Trump Media, Trump held approximately 79 million shares before factoring in the earnout. With the additional 36 million shares earned through the earnout provision, his equity stake surged to a total of 115 million shares, amounting to approximately 65 percent ownership of the company.
However, the path to accessing the funds represented by these shares is not without obstacles. Corporate insiders, including Trump, are subject to a lock-up period of 150 days following an initial public offering, during which they are restricted from selling their shares. Any attempt to sell a significant portion of his stake during this period could have adverse effects on the stock price, given the close association of the company with Trump’s persona and the speculative nature of its valuation.
Furthermore, Trump’s financial landscape is further complicated by ongoing legal battles. He currently faces a hush-money trial in Lower Manhattan, alongside hefty legal judgments and bills from other cases, including defamation lawsuits and civil-fraud claims. These legal challenges cast a shadow over Trump’s financial future and could potentially impact his ability to access funds from his company’s stock holdings in the foreseeable future.
