Trump Media Faces New Challenges as Sale Restrictions for DJT Lift

Post-Merger Low for Trump Media

Shares of Trump Media fell to a new post-merger low Thursday, the day that former President Donald Trump is expected to start selling his nearly $2 billion stake in the owner of social media platform Truth Social. The company, which trades as DJT on the Nasdaq, closed down nearly 6% at $14.70 per share.

Impact of Lockup Expiration

Trump, the Republican presidential nominee, owns nearly 57% of DJT's outstanding shares. That stake at Thursday's closing price was worth nearly $1.7 billion—almost half of Trump's estimated on-paper net worth. Trump and other early investors have been barred from selling their shares under a lockup agreement that took effect when the company went public following a merger with a blank-check firm in late March. Those restrictions were set to expire as soon as the closing bell Thursday.

• Trump Media has acknowledged in regulatory filings that the end of the lockup could spur large sales of the company’s stock.
• Trump, the majority shareholder, said Friday that he has no plans to sell his stake, which sent the stock soaring briefly before it gave up those gains.
• Other company insiders might try to cash in as soon as they get a chance.

Financial Performance and Market Sentiment

The company’s fortunes are closely tied to Trump, whose use of Truth Social serves as a main draw to the platform. After an exuberant trading debut, Trump Media has experienced a months-long decline that coincides with Trump's contentious presidential campaign against Democratic nominee Kamala Harris.

Recent earnings reports reveal that Trump Media has sustained losses of around $344 million on revenue of less than $2 million in the first half of the year, primarily relying on ad sales, with Truth Social producing limited user engagement compared to other social media giants.

Market Cap and Political Influence

Despite the challenges, Trump Media holds a market capitalization of nearly $3 billion as some retail investors participate to support Trump or wager on his political prospects. After Trump narrowly survived an assassination attempt at a campaign rally in July, shares briefly rallied. However, following lackluster polling results and poor reviews from conservative commentators after recent debates, DJT shares have plummeted.

Legal Developments

With the lockup expiration approaching, Trump Media has sought an injunction to prevent ARC Global, a sponsor of the merger that brought the company public, from immediately selling its shares. Nonetheless, recent court rulings have not favored Trump Media.