Donald Trump was awarded additional shares in Truth Social’s parent company TMTG even though its shares are in free fall.
Former US President Donald Trump will be awarded $1.3 billion in earnout shares in the Trump Media & Technology Group (TMTG), the company’s board said. TMTG is the parent company of Truth Social, Trump’s proprietary social media platform mainly aimed at his supporters.
Specifically, Trump will receive 36 million shares on top of the 78.75 million already in his hands. The earnout, however, will be revoked if shares fall below $17.50 in price. Currently, TMTG shares trade at $35.50.
TMTG went public last month after years of legal and corporate battles. The second it hit the market, Trump’s shares were worth over $6 billion, trading at $46.30 per share.
But investors were worried about the company’s earnings. According to the IPO filings, TMTG made $4 million in revenues with over $58 million in net losses. Analysts pointed to a severe overvaluation of the company, claiming its stock price was mostly due to Trump’s personal popularity.
Indeed, TMTG’s stock price plummeted in the weeks following its IPO, currently trading at roughly 50% below its initial value.
Donald Trump’s net worth, initially increased by $3.8 billion, dropped by $2.5 billion in just a few days. A TMTG spokesperson boasted the company’s $200 million in the bank and debt-free status.
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According to the merger deal which brought TMTG public, Donald Trump cannot sell his shares before six months from the deal. Trump pledged not to sell his shares before September, even though the board could reverse the restriction.
Trump is the official Republican candidate for the 2024 US elections, meaning he will have to spend millions of dollars on the presidential campaign.
Moreover, Trump also has to pay two hefty fines. In recent months, the former president was hit by two charges, both by a New York court. The first found Trump guilty of misrepresentation of his New York asset, charging him with a $454 million fine, later reduced to $174 million. The second charged Trump with defamation against author E. Jean Carroll, forcing him to pay $83.3 million in damage reparation.
Donald Trump is also undergoing a hush money trial in New York, where he could face up to 4 years in prison. While it is unlikely he will be placed behind bars, the court could charge Trump with another multi-million dollar fine.
The $1.3 billion earnout share award could be a vital lifeline for Donald Trump. TMTG’s stock price will most likely continue to fall in the following months, with a real risk of dropping below the $17.50 threshold.
