Donald Trump is on the brink of witnessing his wealth surge by $1.3 billion.
The ex-president of the United States is poised to collect an earnout bonus of 36 million shares in his recently publicized enterprise, Trump Media & Technology Group. This bonus was established as an incentive for the firm's initial public offering in March, as detailed in a regulatory filing.
In order for Trump to secure the additional shares, which are in addition to his existing 57% ownership of 78 million shares, Trump Media must maintain a trading price at or above $17.50 per share for a minimum of 20 trading days within a 30-day timeframe. With Tuesday marking the 20th trading day since the stock's debut, Trump is poised to receive the bonus — provided the stock price does not dip below $17.50 today.
Based on yesterday's closing price of $35.50 per share, the value of Trump's earnout stands at $1.3 billion.
Still, Trump won't be able to cash out the new stock immediately. He and other Trump Media executives are largely restricted from selling their shares for roughly another five months. Such lockup periods, as they're known, are common with newly listed companies because they keep insiders from dumping shares shortly after a company goes public, which can destabilize a stock and cause it to sink in value.
With the additional earnout stake, Trump will own about 115 million shares of DJT, which on paper have a value of $4.1 billion. The windfall comes as Trump is facing increasing financial pressures due to legal judgments as well as ongoing legal expenses.
Trump Media, whose main asset is the Truth Social social media platform, has had a bumpy ride since its shares started trading last month. The shares initially surged, reaching a peak of $79.38 per share on its first trading day, March 26, followed by a weeks-long slide that spurred CEO Devin Nunes to accuse some investors of manipulating the stock through an illegal form of short selling.
At its current price, Trump Media is worth about half of its peak value.
Trump's small investor base
Many of Trump Media's shareholders are individual investors and supporters of the former president. About 600,000 retail investors have bought shares in Trump Media, Nunes has told Fox Business, calling them "the most amazing part about our company."
"[W]e don't have any institutions, zero Wall Street money," Nunes also told Newsmax last week.
During the latest announcement, Trump Media emphasized the importance of safeguarding stockholders' shares from potential "short sale" exploitation. This practice involves investors borrowing shares of a stock they predict will decrease in value, selling them immediately to generate profit. Subsequently, if the stock price declines as anticipated, the trader repurchases the shares at the reduced price and returns them to the initial borrowing source.
Trump Media's recent statement aimed to educate long-term shareholders who maintain faith in the company's future on how to shield their shares from being utilized in short selling transactions. This guidance includes opting out of securities lending programs that enable brokers to lend their shares and ensuring the stock is not held in a margin account.
The company's dedicated base of Trump supporters and the fluctuations in its stock value have drawn parallels to the phenomenon of "meme" stocks like GameStop. These stocks often attract individual investors based on social media trends rather than conventional financial indicators like revenue and profit growth.
