Former US President Donald Trump set to receive $1.3 billion in stocks from Truth Social
Former US President Donald Trump is on the verge of a major financial windfall as he is set to receive 36 million shares of Truth Social, a social media platform owned by Trump Media & Technology Group. The milestone is expected to be reached after the market closes on Tuesday, with the new shares valued at approximately $1.3 billion at current prices.
Despite Trump Media reporting losses and Truth Social being a relatively small platform, Trump’s net worth has been on a roller coaster since the company went public last month. The stock price of Trump Media has experienced significant volatility, with experts calling it a “meme stock on steroids.”
The merger agreement between Trump Media and Truth Social stipulates that Trump will receive 90% of the earned shares, totaling 36 million additional shares. This would give Trump a dominant stake of 114.75 million shares, representing 65% of the total shares outstanding.
While Trump’s potential earnings from the stocks are substantial, there are practical and legal restrictions that may prevent him from cashing in on the shares in the near term. The earned shares are subject to blocking restrictions that prohibit insiders from selling or borrowing against their shares for months after the merger closes.
Experts caution that Trump Media’s stock price is volatile and overvalued by fundamental metrics. The stock trades at over 1,200 times sales, compared to the average social media stock trading at a price-to-sales ratio of about 10 times. Some experts predict that Trump Media’s stock price could eventually fall to just $1 or $2 per share.
In response to concerns about short selling, Trump Media recently updated its website with tips for shareholders on how to prevent their shares from being loaned to short sellers. The company’s efforts to address these issues reflect the ongoing challenges faced by Trump Media as it navigates the volatile stock market.