Wall Street’s rout has given Donald Trump a $6 billion blow

Companies that have recently gone public often implement lockup agreements to show investors that their top executives and financiers are committed and won’t race to cash out. But Trump’s lockup has proven unusually costly, at least on paper, given the size of his stake and the extent of the decline. Trump Media’s market debut in March propelled Trump into the world’s 500 richest people. Last week, according to Forbeshe had dropped to number 851. (Trump has previously said that the Forbes (The ranking understates his fortune.)

Trump’s lockup period is expected to end around Sept. 20, based on calculations laid out in financial documents tied to the stock’s performance. Other executives and early investors in the company who received millions of dollars in salaries and stock will also be released from lockup and allowed to sell some or all of their shares around the same time.

But a stock selloff under the company’s leadership could undermine its share price and drive away new investors. Trump Media has called Trump’s potential stake sale one of several “risk factors” in securities filings and said the company would be “materially adversely affected” if he chooses to sell his stake after the lockup period expires.

“You don’t want to be left with a bag of opportunities that were once overflowing,” Rekenthaler said. “But if you rush the process, it will drive down the stock price. It also doesn’t look good for shareholders, or generally for your confidence in the company and its prospects.”

Trump’s shares in the company represent one of his largest economic assets and could provide a large cash injection as he and his campaign struggle financially. Trump has been ordered to pay at least $US454 million in a civil fraud case in New York and $US83 million in a defamation lawsuit brought by writer E. Jean Carroll. Trump, who is appealing both sentences, listed both obligations as still more than $US50 million in a financial disclosure last month.

“There is no conceivable advantage from a business perspective. … This is a personality stock and a celebrity stock.”

John Rekenthaler, vice president of research at financial services company Morningstar.

Trump received 78.7 million shares when the company went public in March and another 36 million shares through an “earnout” provision a month later tied to the stock’s performance, securities filings show. If he had been able to sell all the shares at market prices immediately after receiving them, his proceeds would have been more than $6 billion, a trade analysis shows.

Trump Media’s stock price has roughly paralleled Trump’s performance in the presidential polls. Both rose after the assassination attempt but have fallen in the weeks since President Joe Biden withdrew from the race and Vice President Kamala Harris began to overtake Trump in national polls. The company has warned in filings that its value could “decline if (Trump’s popularity) were to suffer.”

While Trump still uses Truth Social as his primary online megaphone, he has expanded his internet footprint to other, larger platforms in recent months. This could undermine a key selling point: access to Trump.

His campaign now routinely posts videos of him to TikTok, where he has millions more followers. He has also started posting regularly again on X, formerly Twitter, and last month sat down for an exclusive interview with billionaire owner Elon Musk. Trump Media shares have lost about a third of their value since that interview.

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Trump Media shares are currently trading at the same price as its merger partner, Digital World Acquisition, was trading at earlier this year, when the merger deal was in doubt. When Digital World announced the merger deal in October 2021, some investors bought shares for as much as $US175.

Trump Media has said the stock is owned by hundreds of thousands of private shareholders, many of whom are amateur investors who support Trump and see the falling stock price as a test of their faith.

Chad Nedohin, a longtime Trump Media supporter in Canada who posts video blogs about the company on the streaming site Rumble, wrote on Truth Social on Wednesday that the stock price was “a hoax to get people to sell.”