Restrictions on former US president Donald Trump dumping shares in his namesake media company are set to expire overnight, allowing the current candidate for office to liquidate his 57% dominant stake should he choose to.
Nosediving stock
Trump has watched the value of shares in Trump Media & Technology Group, which owns the Twitter copycat Truth Social, nosedive by over US$4 billion in the past four months, from US$6.2 billion to US$1.8 billion.
With the lock-up period ending as early as Thursday, US time, Trump and other insiders will have the option to sell shares, which could fast-track the company’s death spiral.
Trump Media’s share price has been plummeting since its initial public offering (IPO) in March, and investors have been watching closely to see if Trump and other major shareholders will offload their holdings.
Investors have his word
Trump has repeatedly claimed he has no intention of selling his shares, telling reporters just last week: “No, I’m not selling. No, I love it.”
His declaration briefly boosted the stock price but did little to reverse the overall trend.
The timing of the lock-up expiration is crucial as the share price remains at historic lows.
While Trump’s refusal to sell may steady investor confidence for now, other insiders, including company co-founders Andy Litinsky and Wes Moss, are also eligible to sell their shares.
Both Litinsky and Moss have been involved in legal disputes with the company, raising the possibility that they could choose to exit.
Other options
The end of the lock-up restrictions will open the door for Trump to explore other financial options, such as using his shares as collateral for loans.
While this would allow him to raise cash without directly selling shares, it would still require disclosure to regulators – failure to do so could land the ex-president in even further legal jeopardy.
Experts point to the recent case of Carl Icahn, who was fined by the Securities and Exchange Commission (SEC) for failing to disclose similar loan arrangements.
The impending expiry of the restrictions, coupled with ongoing uncertainty about Trump Media’s future direction, put Trump in a challenging position.
As he is the controlling shareholder, stock will tank if he pulls out, leaving the company yet another one of the tycoon’s failed ventures to end up on the cutting room floor.