Former President Donald Trump will soon be free to start unloading his multibillion-dollar stake in his fledgling social media startup, Trump Media.
But the potential payday — Trump’s stake comprises more than half of his on-paper net worth, per Forbes — carries risks for both the Republican presidential nominee and his company.
Trump holds 114,750,000 shares, or nearly 59%, of Trump Media, which owns the social media platform Truth Social. As of Thursday, his stake was worth slightly more than $2.6 billion.
But Trump, along with others who received stock in the company before it went public, are barred from selling any of their shares for approximately 180 days under a “lock-up agreement.”
Those provisions are a common feature of IPOs, meant to prevent company insiders from immediately cashing in their shares as soon as a company goes public. This helps keep the stock stable and marketable to investors in its first few months on the market.
Trump Media made its debut on the Nasdaq under the ticker DJT in late March, following a lengthy merger process with a special purpose acquisition company.
The lock-up restrictions, which began after the businesses combined, are set to end on Sept. 25.
They could also be lifted earlier, if the stock price stays at or above $12 per share for any 20 trading days within the 30-trading-day period that starts Friday, according to the company’s regulatory filings.
If shares of DJT remain above this price point — and they seem likely to — the lock-up could expire as soon as Sept. 20.
What happens after that is anyone’s guess.
Trump has not said what he plans to do with his shares once the lock-up lifts, and a spokeswoman for Trump Media did not reply to questions about it from CNBC.
A spokesman for Trump’s presidential campaign referred inquiries about Trump’s stock to Trump Media.
“If I was going to speculate, I’d be speculating on the downside, not the upside,” said Daniel Bradley, a professor of finance at University of South Florida.
That view has “absolutely nothing to do with my political views,” he noted, and “everything to do with pure economics.”
If Trump sells
If he chooses to sell all or part of his stake, Trump may have trouble finding buyers — and that possibility alone could affect the share price.
“If there’s not enough buyers there, then yeah, the stock price ultimately is going to have to fall substantially,” Bradley said.
Trump Media noted in a Securities and Exchange Commission filing that once the lock-up lifts, the sale of “a substantial number of shares” of its common stock “could occur at any time.”
“These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price” of DJT stock, the filing said.
If Trump does sell, he will be required to disclose the transaction in a regulatory form within two business days.
That said, a “significant number of insiders” violate the SEC reporting requirements by filing open-market transactions after the legally required deadline, according to a 2023 study in the Journal of Financial and Quantitative Analysis.
Cashing out his stake could provide a major financial boost for Trump, who is fighting hundreds of millions of dollars in legal penalties and has already reportedly racked up more than $100 million in lawyer’s fees.
But it would also likely tank investor confidence in Trump Media, which notes that Truth Social’s success is at least partly dependent on the popularity and reputation of Trump, its main draw.
Investing in the company has been seen as a way to support Trump or bet on his chances of beating Vice President Kamala Harris in the presidential race.
That meme-stock dynamic has benefited Trump: Even as Trump Media’s stock price has swung wildly up and down over the past five months, its multibillion-dollar market capitalization has stayed consistently high relative to its small amount of revenue.
After Trump survived an assassination attempt at a campaign rally in mid-July, betting markets boosted his chances of winning the election. On the next trading day, Trump Media stock surged more than 30%.
But the company has suffered a major stock slide in recent weeks, the same time that Harris upended the 2024 race by replacing President Joe Biden as the Democratic nominee.
Where prior polls showed Trump growing his lead over Biden, more recent surveys show Harris closing the gap or leapfrogging Trump, both nationally and in key swing states.
And despite its seesawing price, as of Thursday’s close, Trump Media’s share price has fallen 71% from its post-merger peak of nearly $80 per share.
That may be because the company’s sole product, Truth Social, generates relatively little traffic and advertising revenue, compared to well-established social media giants like X and Facebook. Financial experts have said Trump Media’s sky-high valuation doesn’t correlate with its fundamentals.
Trump Media is “at this point, a pure play proxy on Trump winning” the White House, Tuttle Capital Management CEO Matthew Tuttle told Politico.
If Trump does win the election, “the shares are going to be more valuable,” said the University of South Florida’s Bradley.
The opposite is also true, said Tuttle. Trump’s recent missteps on the campaign trail, he said, “have been hammering the stock.”
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