Trump Set To Receive BILLION-Dollar Payday

OPINION:  This article contains commentary which may reflect the author’s opinion

After battling endless legal issues, former President Donald Trump is now receiving positive news. As he purchases 36 million more shares in Trump Media & Technology Group, Trump’s wealth is predicted to soar, possibly reaching a net worth of more than $1 billion.

The enormous financial gain results from a “earn out” clause in the merger agreement that created Trump Media & Technology Group, the company that owns Truth Social, a social media platform. According to CNBC, the clause, which is dependent on the performance of the company’s stock, gives Trump more shares in the event that specific criteria are met.

For Trump to be eligible for the bonus shares, Trump Media shares, which are traded under the ticker DJT, must sustain a minimum price of $17.50 for a predetermined amount of time. The stock was safely above this cutoff as of the most recent trading session, guaranteeing that Trump would receive the shares.

With the acquisition of these shares, Trump would possess more than 114 million shares in the corporation overall, solidifying his position as the main stakeholder with almost 65% of all existing shares. According to CNN, Trump’s ownership position in the business would be worth an estimated $4 billion at the current stock price of $35 a share.

In the opening remarks of Day 5 of the criminal hush money trial of former President Donald Trump, which is being held in Manhattan, New York on April 22, prosecutor Matthew Colangelo takes the stand on Monday morning.
In the opening remarks of Day 5 of the criminal hush money trial of former President Donald Trump, which is being held in Manhattan, New York on April 22, prosecutor Matthew Colangelo takes the stand on Monday morning.

Trump Media continues to struggle with profitability despite the financial bonanza; last year, the company reported large losses and little income. Due to the disparity between market value and financial soundness, several analysts have deemed the company to be “overvalued” and forecast price volatility. The company saw its shares surge to about $80 at first after becoming public through a merger with Digital World Acquisition Corp., but they have since seen a significant fall.

Fortune reported:

Few stocks have been as volatile as Trump Media & Technology Group in recent weeks, but if shares can avoid a massive plunge for the next two trading days, Donald Trump’s personal fortune is set to leapfrog once again.

Trump stands to receive another 36 million shares of the company as long as shares stay above $17.50 through the end of trading Tuesday. (As of midmorning Monday, they stood at just under $36.)

Per the company’s SEC filings, the company can issue additional shares to those who had a pre-merger interest in Trump Media, including Trump himself, if the average price per share stays above $12.50 for at least 20 of the first 30 days it is traded. Tuesday will mark the 20th day of trading for the company and it has stayed well above that figure, even with the extreme ups and downs.

If the price stays above $17.50, which it has easily done, that would trigger an earning out of 40 million shares. Trump would be eligible to receive 90% of those—or 36 million. At current prices, that would be valued at over $1.25 billion, given today’s price.

At present, Trump would not be able to cash those shares in, due to lock-up restrictions, though the company’s board does have the power to waive those. As he is the company’s largest shareholder, though, any significant sale of shares by him could cause the company’s valuation to fall even further. (With this expected additional payout, he will own 114.75 million shares of the company, 65% of its total stock.)

Analysts are skeptical of Trump Media, saying the company is overvalued and the stock price does not accurately reflect the company’s fundamentals.

Trump Media lost $49 million in the first nine months of last year, when it brought in just $3.4 million in revenue. In the past month, the company’s market cap has fallen from $10 billion to $4.78 billion. Shares were down 4% in midmorning trading Monday.

There are both practical and legal restrictions on Trump’s newfound fortune. When and if Trump decides to sell, the shares’ eventual market value may be impacted by the lock-up period that prohibits them from being sold for several months following the merger.

Furthermore, the probable overvaluation of Trump Media and the volatile stock price indicate that the former president’s payoff may not materialize into marketable assets anytime soon. It will be intriguing to observe how Trump’s growing fortune will affect his campaign and political clout as he prepares for another presidential bid.

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