Former President Donald J. Trump’s already sizable stake in his social media company will increase by more than $1 billion as he will be rewarded with additional shares in Truth Social’s parent company as its stock price plummets. has remained high in recent weeks.
The windfall comes at a crucial time for Trump, who is facing hundreds of millions of dollars in legal bills tied to multiple cases against him. The presumptive Republican presidential nominee is also stepping up his political campaign, and his rising net worth reinforces his image as a wealthy businessman, an important part of his pitch to voters.
Trump is already the largest shareholder in Trump Media & Technology Group with 79 million shares, a stake currently worth nearly $3 billion. He is now entitled to 36 million more shares under what is known as “earnout,” additional shares that would raise the value of his stake to more than $4 billion.
Earning shares, a feature of mergers, are designed to reward insiders if a company’s stock performs well over a set period after completing a deal. Trump Media merged with a public shell company last month and made its debut on the Nasdaq on March 26. The new shares would increase Trump’s stake to about 65 percent of the company.
An initial frenzy raised the company’s value to nearly $8 billion, but the share price has fluctuated wildly since then, falling by about half from its peak. Trump Media has been a popular target for short sellers, who make money by betting on a company’s stock price to fall.
Despite the ups and downs, Trump Media’s stock price has remained above levels set as triggers for granting additional shares to Trump and other shareholders. Shares are awarded in batches, based on whether the stock trades above $12.50, $15 and $17.50 for 20 out of every 30 days in its first two years as a public company. The stock, which closed at $35.50 per share on Monday, has traded well above all three of those thresholds since its debut in March, and was on track to meet earnings conditions on Tuesday.
As with the other stocks he owns, Trump is not yet allowed to trade them or use his shares as collateral. With the shares at their current price, Trump must wait 150 days, or until the end of August, before he can sell part of his stake, although the shares could trade sooner if Trump Media’s board were to waive the restrictions.
The company filed the registration of millions of potential new shares last week, a routine procedure that nonetheless spooked investors.
Typically, the filing of new shares like this doesn’t tend to cause much of a market reaction, but Trump Media’s unusual ownership, which includes retail traders and Trump loyalists, has caused wild swings in its share price. If a flood of new shares hit the market, it could shake up the stock price again.