Trump Media plunges amid plan to issue more shares. It's lost $7 billion in value since its peak.
Trump Media plunges amid plan to issue more shares. It's lost $7 billion in value since its peak.
The former president's media company has had a rough start on Wall Street, shedding two-thirds of its value since its peak.
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The filing also includes all the shares held by the former president. Trump, however, remains under a "lockup" deal that largely restricts him from selling his shares for another roughly five months. His son, Donald Trump Jr., who is a director on the board, and CEO Devin Nunes, are also bound by the lockup.
The stock plunge has erased billions from Trump's stake — at least on paper. The shares soared when they began trading on March 26, giving Trump's 57% ownership position a value of $6.25 billion. But after DJT's recent slump, that stake is worth $2.1 billion, representing a paper loss of $4.15 billion.
People keep saying trump wasn't prevented from selling for 6 months, and I have no idea why.
But this is why I was happy it started trading so high. trump was/is pushing supporters to buy shares as a way of donating. But those people are throwing their money away and it'll still crash before trump can sell. He's not just losing profit, he losing donations too.
Plus this way trump has to spend 6 months watching something literally trading under his name (djt) constantly hemorage money and there's not a damn thing he can do about it.
When he saw that 6 billion number, he immediately considered it "his money" so even if he makes a couple hundred million selling his whole stake in this; it's going to feel like he's lost billions to him.
And hopefully the DJT stock lumps on without him for years as a shitty penny stock
People keep saying trump wasn't prevented from selling for 6 months, and I have no idea why.
So, yes, he's currently subject to a lockup agreement. But, the board can always waive that agreement, and given the board is made up of Trump acolytes, there's no reason to take it too seriously (yes, if they did that, it could be subject to a shareholder lawsuit if a sale resulted in a plunge in the share price, based on the claim that the board was failing in its fiduciary duty, but by the time any such trial made its way through the courts, it probably wouldn't matter).
His son, Donald Trump Jr., who is a director on the board, and CEO Devin Nunes, are also bound by the lockup.
Who exactly do you think can waive it?
The board can vote to waive it. That's... how boards work. They could vote to waive Junior's and Nunes' lockups, too, if they wanted to. The only recourse shareholders would have is a lawsuit.
Edit: And if you don't want to believe me, maybe you'll believe a professional financial writer:
https://www.bloomberg.com/opinion/articles/2024-03-19/banks-can-get-emissions-off-the-books
Also, Trump’s shares are subject to a lockup agreement, so he’s not allowed to “lend, offer, pledge, hypothecate, encumber, donate, assign, sell, contract to sell … or otherwise transfer or dispose of” his shares for six months, which presumably covers using them as collateral for a loan (or appeals bond). But the agreement is between Trump and DWAC, and DWAC could just waive it. It is not best practices or anything, as a capital markets matter, to waive the lockup an hour after the merger, but I think it is possible. Ordinarily you don’t do it because shareholders will be mad about additional shares flooding the market, but (1) if he just pledges his shares to a bank, they won’t flood the market, and (2) the shareholders are presumably Trump fans and will be happy to help him fund his legal bills. Probably the stock would go up if they gave him a limited waiver for this.
Edit 2: This, by the way, is why folks are so critical of the Tesla board and why Elon's recent pay package was rescinded by a judge, who determined the board did not act in the best interests of the shareholders by approving that package; rather, they concluded the board was too close to, and too beholden to, Elon to be able to effectively negotiate that package.
Boards are basically the last line of defense when it comes to things like pay packages and so forth, but that doesn't stop shenanigans from happening, hence shareholder lawsuits, which are basically the final recourse for shareholders to hold boards to account.
The board can vote to waive it.
I'm not sure they could though. They could probably waive his ability to pledge the stock as collateral, but not sale. Ultimately, the board has a fiduciary duty to the shareholders and I'm not sure there's a conceivable reason they could come up with that's in the shareholders interest. Power to do it, sure, but they're going to be defendants in a shareholder derivative suit.
4d chess would be trump placing shorts before they even went public.
Shorting before the merger wouldn't have made any sense: the stock price went from around $17.50 to over $50 within the first week of trading and probably won't come back to earth for a while. Meanwhile borrowing costs, after that initial spike when the stock was at its highest, were astronomical, so it wasn't economical to do it right after, either.
The real 4D chess would be to get that lockup waived, short the stock now (borrowing costs have since fallen back to earth), sell your shares, then close out the short after the price drops (sure, you run the risk that the SEC goes after you for stock manipulation, but I doubt Trump cares).
won't come back to earth? it's trading at 22.93 at this moment and was around 60 at the beginning of April...seems like it deorbited fairly fast to me
Yeah but to make any real money on a short position taken prior to listing, the stock would have to drop well below that $17 price. Will that happen? Maybe. But I personally wouldn't bank on it. My bet is that pre-listing price will be a bit of a floor since so many retail meme stock types got in on that price pre-merger and won't want to get out.
oh man, I respectfully disagree. I think they will add more stock further diluting the price and it will crater. that's why puts are so expensive right now
Hah, well, I would be more than happy to be completely wrong!