The future of Trump Media faces increasing uncertainty.
The parent company of Truth Social, a social media platform predominantly owned by former President Donald Trump, is encountering a critical juncture as an insider sales lockup period is set to expire on Thursday. This shift allows Trump the potential to begin liquidating his 57% stake, estimated to be worth approximately $2 billion.
On Thursday morning, shares in Trump Media experienced a decline exceeding 4%, reaching an all-time low of $14.77 at one point. The share price has plummeted nearly 80% since Trump Media went public under the ticker symbol DJT in March.
Despite the market conditions, Trump announced last week that he has “absolutely no intention of selling” his stake in Truth Social. This statement has provided some reassurance to investors, who believe that such a sale would further depress the stock’s value. Matthew Tuttle, a professional investor, suggests that Trump would be reluctant to see the stock price decrease as a result of selling his shares.
However, with the expiration of the lockup period, Trump now has the option to reconsider and potentially sell his stock in the future. Trump Media has yet to respond to NPR’s request for comment.
The prospects of Truth Social are closely intertwined with the upcoming election. Trump Media operates as a meme stock, traded more for its symbolic significance than its actual business performance. The company reported over $16 million in losses during its most recent quarterly earnings, and there are indications that demand for its main product is diminishing. Truth Social was launched as a conservative social media network in 2022, following Trump’s ban from Twitter.
Since Elon Musk’s acquisition of Twitter, now rebranded as X, Trump has been allowed back onto the platform. Recently, Trump introduced his new business venture, a cryptocurrency platform, through an interview on X.
Many investors in Trump Media are staunch supporters of the former president, making the company’s share performance a barometer for investor sentiment regarding Trump’s election campaign. In July, shares rallied following an assassination attempt on Trump during his campaign against President Biden. However, last week, shares decreased following Trump’s debate with Vice President Kamala Harris.
Ultimately, Truth Social’s future is likely contingent on the election outcome. Should Trump win in November, the shares are expected to perform well, despite potential conflicts of interest stemming from his ownership. Conversely, a loss in November could spell unfavorable news for Truth Social and its investors.
Matthew Tuttle asserts that trading Trump Media’s stock is fundamentally an election play based on Trump’s electoral success. According to Tuttle, the stock would surge if Trump wins and plummet to zero if he loses.
