Former President Donald Trump is set to receive a significant financial windfall from his social media company, Truth Social. The parent company of Truth Social, Trump Media & Technology Group (TMTG), closed trading on Tuesday at $32.50, triggering a bonus known as an earnout for Trump. This bonus, which is based on the stock trading above $17.50 for 20 trading days, is worth approximately $1.2 billion and will add another 36 million shares to Trump’s stake in the company. The earnout incentive is designed to reward insiders if a stock performs above a certain threshold for a set period of time following a merger. Truth Social went public on the Nasdaq on March 26 via a SPAC merger, initially trading as high as $80 in its first week before experiencing a decline during a period of broader market volatility. In recent days, the stock has recovered somewhat, trading in the $30 to $40 range, although it fell a sharp 8 percent on Tuesday. Before the earnout bonus, Trump was the majority shareholder of TMTG, with a stake of about 79 million shares—worth around $3 billion. With the additional shares, his equity stake is now up to 115 million shares, totaling about 65 percent of the company and worth more than $4 billion as of Tuesday’s closing price. However, the timing and method by which Trump can access these funds are uncertain. Corporate executives and investors, including Trump, are subject to a 150-day lock-up period after the stock goes public. This means that unless an exception is approved by the company’s board, Trump will not be eligible to cash out any of his stake until late August at the earliest. Even if he were granted an exception, given how closely the company is tied to his name and likeness, it would be difficult for him to sell a significant portion of that stake without causing the stock price to fall sharply. It is worth noting that Truth Media lost $58 million last year, on just over $4 million in revenue, and is widely viewed on Wall Street as a “meme stock” that isn’t tied to the typical fundamentals that govern most publicly traded companies. In addition to the financial implications, it is important to consider the legal challenges facing Trump. He is currently in criminal court in Lower Manhattan this week, where opening statements in his hush-money trial kicked off on Monday. He’s already on the hook for hundreds of millions in legal judgments and bills from other cases against him, including an $83 million defamation judgment in the civil case and another $450 million he owes the state of New York in a civil-fraud lawsuit. Trump is appealing both of those judgments.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground. Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
