“Market watchers have debated whether Trump would sell shares, with some suggesting an exit could indicate he is prioritizing personal profits and alienating loyal followers who have poured money into the stock.” Barron’s, Trump Media Shares Soar After Trump Says ‘I’m Not Selling’, September 13, 2024.
“No, I’m not selling… I don’t want to sell my shares. I don’t need money… I absolutely have no intention of selling.” Donald Trump, Twitter, September 13, 2024
Trump’s assurances have a poor track record, as we know. This particular assurance to not sell shares in his Trump Media stock will be severely tested as of next Thursday, September 19. Here’s why.
Firstly, his assertion that he won’t sell his shares because he “doesn’t need money” is untrue. Trump always needs money; he’s always been raising money to, for example, fend off bankruptcy of his casinos in the 1990s. And now? Civil judgments against him, and tthe legal bills accompanying them are in the neighborhood of $600 million. In addition, financing his appeals of various legal actions against him by Special Prosecutor Jack Smith and others cost tens of millions of dollars. Many of these bills are being paid for not ot of his own pocket but by the RNC which is run by his daughter-is-law Lara Trump which has led to a short fall of donated funds available to his presidential campaign. So, yes, he needs money.
Secondly, he doesn’t care who he fleeces to raise money. In fact, he’s been trying to fleece the MAGA herd since day one. And, conveniently, they keep coming back for more. This is a guy who has sold his supporters digital trading cards, gold colored sneakers, and commemorative coins. So, despite the fact that a goodly number of those supporters have invested in DJT, he’ll not hesitate to fleece them by, for instance, selling large lots of shares and thereby causing the price to fall, perhaps causing a large drop from its present anemic price. Recall, he needs money.
Here’s his estimated DJT position:
Total Shares = 194,000,000; Trump owns 60%. = 116,400,000 shares; = 7,708,008,000 billion at its 2024 high $66.72/share, BUT that’s shrunk by more than 70% to 1,978,800,000 billion at today’s share price of $17/share. An on paper loss of some 5,730,000,000 billion. Trump is not pleased, we might suppose.
The Crucial “Lockup Period”
The trading debut of DJT initiated what’s known as a lock-up period, a standard procedure for newly public companies in which certain shareholders, like those who own 5% or more of shares or who serve in a high-level management role, mandating that they cannot sell shares until a predetermined date. At DJT these insiders include Trump himself; DJT board members (i.e., Donald Trump, Jr., David Nunes, and other Trump confidants); co-founders, Andy Litinsky and Wes Moss*, both former contestants on The Apprentice; and others.
The company’s latest prospectus filing with the Securities and Exchange Commission outlines three factors that would trigger the lock-up period to conclude:
- The end of the first six months of DJT stock trading as its own entity on September 29, or
- Trump Media shares trading above $12 for any 20 of 30 trading sessions on September 19, or
- a transaction, like a merger, in which all shareholders have the opportunity to trade in their Trump Media holdings at the same price, or
- an affirmative vote by DJT’s Board of Directors
That means the earliest possible date Trump can sell is Sept. 19 if Trump Media shares remain above the $12 threshold, otherwise his selling date will open is on Sept. 25. Note, however, that “”Insiders might still be prevented from selling their shares after the lock-up period expires. That can happen when an insider has access to material, nonpublic information, where the sale of shares would legally constitute insider trading.”
I expect that he will sell whenever he can do so legally, although should he sell large blocks of DJT over few days the stock price would likely fall precipitously. He might still make hundreds of millions at lower shre prices, as would other insiders, yet Trump would take a public relations hit, especially if his MAGA supporters took a beating on their own desperate sell orders. A better strategy would be to sell more slowly, or not sell at all and, instead, seek a loan or loans against his holdings, yet, who is eager to loan him money on any collateral. Poor Trump, he needs an intelligent strategy and tactics. And he’s remarkably stupid. We’ll see what happens after September 19th.
Interesting. And the true value of DJT is TBD, as always.