Once again, Trump Media has had to correct a major misstep. And once again, shareholders have received an unsatisfactory explanation. Considering the major selling risk over the next four weeks, it’s time to sell.

The latest costly mistake

From the filing of Form 8-K with the SEC on Friday (August 23):

“Effective August 22, 2024, the Board of Directors and Audit Committee of Trump Media & Technology Group Corp. (the “Company” or “TMTG”) authorized a share repurchase of an aggregate of 128,138 shares of the Company’s common stock from certain executive officers at the current market price of $22.70 per share. In consideration for the repurchase, the Company will remit $2,908,708, plus applicable penalties and interest, to the Internal Revenue Service and certain state tax authorities in connection with the issuance of the TMTG Executive Promissory Notes on March 7, 2024.”

Okay, let’s identify the gaps and, if possible, determine what happened…

• What is the huge IRS payment of $2.9 million for? Taxes? A fine?
• And how much do these undisclosed “applicable penalties and interest” add to the bill? The penalties can be high, so shareholders should be aware.
• What prompted the payment to the IRS? “In connection with the issuance of the TMTG Executive Promissory Notes dated March 7, 2024” is an incomplete explanation. What went wrong? What we do know is that Donald Trump wanted to reward the executives with promissory notes, not cash, that would convert to stock when the merger was completed. That’s what happened.
• Who made recommendations to the board? And Audit Committee to approve a share buyback? And why did shares have to be bought back?
• Why were “certain senior executives” singled out? Stock buybacks are usually conducted on the open market to achieve the lowest price.
• All of the executives’ shares are subject to a lock-up period that ends in September, so how could their shares be made available for sale now?
• The table below lists the five Trump Media executives and their buybacks. Note that 18.6% of their total shares were bought back as a group. Also note that CEO Devin Nunes and General Counsel Glabe Scott bought back larger portions of their shares without explanation – penalty?

• The $2.9 million payment to the IRS represents the value of the repurchased shares at $22.70. The company therefore paid $2.9 million to the IRS. And $2.9 million to the selling executives? Probably not. There is some confusing wording: “in consideration for the buyback.” Does that mean the board and audit committee (and likely majority shareholder Donald Trump) decided the executives should send their buyback proceeds back to Trump Media to cover the IRS payment?

All questions should be answered so that shareholders (owners) understand what is happening with their investment.

Then there are the complaints…

Included in this SEC filing is a list of lawsuit updates. It’s important to remember that most of Trump Media’s lawsuits are against the originators of the Trump Media idea, the originators of the Digital World Acquisition SPAC that merged into Trump Media, Digital World’s financial backer, and its main service provider. In other words, Trump Media now has disagreements with the people and organizations that provided Trump Media with the money it needed and paved the way for it to become a publicly traded company. And those shareholders are part of the large group of locked-in shareholders.

And this brings us to the main reason for the current sale.

The four-week countdown to the release of DJT shares has begun. While Donald Trump owns many of these currently locked shares, a significant portion of the remaining shares are held by parties who did not choose to invest in Trump Media. There are lenders whose repayments were made in shares, service providers who paid in shares, and others who acquired free or low-cost Digital World shares. And some shareholders are parties to the litigation.

Therefore, it’s very likely that many shareholders who have locked up their shares are looking forward to finally being able to get out, especially given the stock’s poor performance. And that reality means shareholders who can sell now should consider doing so. They have a unique advantage that will disappear overnight in four weeks.

But won’t the sale hurt Donald Trump?

No. It has taken care of itself. Also, any price drop caused by shareholder selling now will likely be small compared to what happens in four weeks. In fact, the combination of the poor Q2 earnings report and the upcoming release will keep most potential investors from holding back. That means expect high price volatility over the next four weeks as day traders try to outsmart each other.

Consider this strategy…

Sell ​​now to create a cash reserve. Then watch what happens when the millions of DJT shares become saleable. Whether the selling effect is small, significant or large, the price is likely to fall. When it reaches $17.50 (starting level in January), there could be more selling as all the excitement and anticipation before and after the merger will have dissipated.

And that’s not all that will happen. Two major events could affect the stock:

• First, the presidential election on November 5. Will Trump win or lose?
• Second, Trump Media’s Q3 earnings report will be released in mid-November. Will it show a positive turnaround or will it confirm another big loss and negative growth?

At that point, you can decide if you want to get back in. As for Trump, he’ll do what benefits him (and that might be selling his unrestricted shares to raise money for a new venture).

Conclusion: Successful investing is the result of timely action

Waiting for the dust to settle or for the price to rise again is a common cause of investment losses. Instead, act when the time is right. And remember, if you have cash, you can relax and decide when to get back in – or not.