Donald Trump may soon begin selling more than $2 billion worth of stock he holds in the company that controls his social media platform, Truth Social, but this could lead to a drastic drop in the stock price.
When Truth Social’s parent company, Trump Media & Technology Group, went public in March by merging with a special purpose acquisition company, the former president received about 114.75 million shares, representing about 59% ownership. That stake represents more than half of his $4.5 billion net worth, according to Forbes, However, he has not yet been able to make a profit from his shares.
This is due to a lock-up period that prevents company insiders from selling shares for about 180 days. Although he has not said he intends to sell his Trump Media (DJT) shares, he will get the green light to do so as early as September 20, when the lock-up period expires. If Trump sells shares, he will have to report it in a filing with the SEC within two days.
The Trump campaign and Trump Media & Technology Group did not immediately respond to a request for comment. Asked whether Trump plans to sell his shares, a Trump Media spokesperson told Bloomberg on Tuesday that there is “no imaginable indication anywhere that he plans to do so.”
The opportunity to sell shares could be a boon for Trump, whose rising legal costs are causing him to New York Times. The embargo expires around the time Trump is scheduled to be sentenced by a judge after being found guilty on 34 counts in a high-profile hush-money trial. Trump could also use the proceeds from his stock sale to fund his campaign, something he may have previously been willing to do.
If he does start dumping his shares, Trump Media’s share price could fall due to the dilutive effect of the increased offer. The company’s share price closed Friday up less than 1 percent at $22.81.
The stock has already had a wild ride this year, soaring 30 percent after the former president survived an assassination attempt in July. But Trump Media shares have plunged about 70 percent since peaking at nearly $80 in March, partly due to the company’s falling revenue and a $16 million loss last quarter.
Trump’s return to rival social media platform X hasn’t helped the stock either. After Trump was banned indefinitely in 2021, when X was still known as Twitter, he has since been invited back by new owner and backer Elon Musk.
According to financial experts, DJT shares serve as a way for investors to bet on Trump’s chances of winning the presidential election in November. But since President Joe Biden ended his re-election campaign and Vice President Kamala Harris emerged as the candidate, the stock has fallen steadily. Harris accepted the Democratic nomination for president on Thursday. She is closing in on Trump in national polls and prediction markets.
This story originally appeared on Fortune.com
