Trump's Media Company Faces Uncertainty as Stock Restrictions Expire

September 27, 2024 05:25 PM AEST | By Team Kalkine Media

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Trump's Media Company Faces Uncertainty as Stock Restrictions Expire — Image source: shutterstock

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Highlights

Trump Media's stock lock-up period is ending soon.

Company shares have dropped significantly in value.

Trump's future actions could impact the company's stability.

Donald Trump, the former US president and current candidate for office, is facing a critical moment regarding his stake in Trump Media & Technology Group, the parent company of Truth Social. Restrictions preventing Trump from divesting his 57% stake are set to expire, giving him and other insiders the option to potentially exit their positions.

Over the past four months, the company's value has plummeted, with shares dropping from US$6.2 billion to just US$1.8 billion. Investors and analysts are closely watching whether Trump or others will take action as the lock-up period ends, which could have a profound impact on the company’s future.

Despite the ongoing decline, Trump has consistently reassured the public that he has no plans to part with his stake. He recently stated, “No, I’m not selling. No, I love it.” While this declaration offered a brief respite for the stock price, it hasn't reversed the overall downward trend.

As Trump faces this key decision, other co-founders of Trump Media, including Andy Litinsky and Wes Moss, are also eligible to sell their shares. Both have been involved in legal disputes with the company, further complicating the situation and raising the possibility that they could choose to divest.

Beyond simply selling his shares, Trump has other financial options. One possibility includes using his stake as collateral for loans, a move that would still require regulatory disclosure. Failure to comply with these rules could land him in legal trouble, as seen in the recent case involving Carl Icahn, who faced penalties from the Securities and Exchange Commission (SEC) for similar actions.

As the lock-up period nears its end, Trump Media & Technology Group's future remains uncertain. Whether Trump remains committed to the company or chooses to explore other financial strategies will have a significant impact on its trajectory, with investors keeping a close eye on any developments.

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