Former President Donald Trump stands to receive a significant boost in his stock holdings with the expected allocation of 36 million additional shares of Trump Media, the parent company of Truth Social app, worth over $1.25 billion at the current market value. The shares, constituting an “earnout” bonus, are contingent upon the stock price hitting a benchmark minimum of $17.50 per share by the end of Tuesday’s trading session.
As of midday Monday, Trump Media’s shares were trading around $35 per share, indicating a substantial increase from their debut price in March. Despite experiencing a downturn since then, the current price remains double the required benchmark for Trump to become eligible for the bonus shares.
Trump Media, which began public trading under the DJT ticker in March, faced initial volatility, reaching a high market capitalization of over $9 billion before witnessing a significant decline in share value. Although the stock price saw a recent uptick, it still lags approximately 50% below its debut price, reflecting substantial market volatility.
The issuance of earnout shares to Trump, added to his existing stake in the company, would value his total holdings in Trump Media at over $4 billion on paper, based on the current share price. However, any shares owned by Trump are subject to a lock-up provision, preventing their sale for six months following the merger’s closure.
While the influx of additional shares to Trump could potentially impact Trump Media’s share price, the company maintains a strong financial position with over $200 million in cash reserves and no debt. Despite ongoing legal proceedings involving Trump, the company asserts its commitment to fulfilling obligations related to the merger and advancing its business agenda.
The broader implications of Trump’s increased stock ownership in Trump Media remain uncertain, particularly amidst market fluctuations and ongoing legal challenges. However, the company’s resilience and financial stability suggest a continued focus on executing its business strategy despite external pressures.
SOURCE: CNBC NEWS
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