Donald Trump's media startup Trump Media & Technology Group Corp.
What Happened: As the lockup agreement nears its expiration, the company's major shareholders are gearing up for a possible sell-off. The company, which operates the social media platform Truth Social, has witnessed a loss of approximately $6 billion in value over the last four months.
The stock has plummeted to its lowest level since its initial public offering through a special-purpose acquisition company (SPAC) merger in March.
According to the report by Bloomberg, Trump, who holds about 60% of the company, has seen his stake dwindle to roughly $2.1 billion. Other significant shareholders, including Andy Litinsky and Wes Moss, co-founders of the company, and Patrick Orlando, whose fund facilitated the SPAC merger, have also suffered considerable losses.
With the lockup agreement's termination on the horizon, investors are expecting a wave of sales from these insiders. However, Trump has asserted that he has no intention of selling his shares. Despite this, the stock experienced a 12% surge following his statement.
The stock of Trump Media has been underperforming, dropping to $17.97 from $40.58 on July 15. Despite reporting second-quarter revenues of less than $1 million, the company's valuation remains high.
As the lockup period concludes, investors are bracing for potential selling pressure. However, major shareholders may face difficulties in discreetly offloading their holdings.
Why It Matters: The impending lockup expiry has created a sense of uncertainty among the shareholders. The significant drop in the company's value has raised concerns about the company's future performance. The situation is further complicated by Trump's assertion of not selling his shares, which has led to a temporary surge in the stock price.
However, the long-term impact of this decision remains to be seen. The company's high valuation, despite its underwhelming revenues, is another point of concern for the investors.
As the lockup period ends, the market is likely to witness significant activity, the outcome of which will play a crucial role in shaping the company's future.
