Former President Donald Trump’s stake in the parent company of Truth Social, Trump Media & Technology Group (TMTG), is set to surge by over $1 billion. This windfall is the result of the company’s stock price remaining elevated in recent weeks and comes at a crucial time for Trump, who faces substantial legal expenses and is gearing up his presidential campaign.
Trump is already the largest shareholder of TMTG, with 79 million shares, a stake currently worth nearly $3 billion. He is now due 36 million more shares under what is known as an “earnout,” additional stock that would push the value of his stake to about $4 billion. However, as with the other shares he owns, Trump is not yet allowed to trade them or use his stock as collateral.
With the stock at its current price, Trump is required to wait 150 days, or until late August, before he can sell any of his stake. However, the shares could be traded earlier if TMTG’s board were to waive the restrictions.
Earnout shares, a feature of mergers, are designed to reward insiders if a company’s stock performs well for a set period after completing a deal. TMTG merged with a public shell company last month and made its debut on the Nasdaq on March 26. The new shares would raise Trump’s stake to about 65% of the company.
An initial frenzy pushed the value of the company up to nearly $8 billion, but the share price has fluctuated wildly since then, falling by about half from its peak. TMTG has been a popular target for short-sellers, who make money by betting on the decline of a company’s share price.
Despite the ups and downs, TMTG’s share price has remained above the levels set as triggers for awarding extra shares to Trump and other shareholders. The shares are awarded in batches, based on whether the stock trades above $12.50, $15, and $17.50 for 20 out of any 30 days in its first two years as a public company.
The stock, which opened at $35.50 per share on Tuesday, its 20th day of trading, has been well above all three of those thresholds since the March debut, keeping it on track to meet the conditions of the earnout.
The company filed to register millions of potential new shares last week, a routine procedure that nonetheless spooked investors. Typically, the registration of new shares like this tends not to cause much market reaction, but the unusual ownership of TMTG, which includes retail traders and loyalists to Trump, has led to sharp swings in its stock price. If a flood of new shares were to hit the market, they could jolt the stock price again.
