HomeBusinessTrump Media drops 15% after registration of shares and warrants

Trump Media drops 15% after registration of shares and warrants

(Bloomberg) — Donald Trump’s social media startup collapsed on Monday, extending a two-week slump, after the company took an initial step to allow the former president and other insiders to profit from their bets.

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Trump Media & Technology Group Corp., parent company of Truth Social, has filed to register shares, including shares tied to warrants. This move could ultimately bring forward insider selling, which is currently not allowed until September.

Shares fell 15% to $27.83 as of 9:50 a.m. in New York, the lowest since January. Warrants, which are tied to the stock and can be exchanged for company stock with cash, fell 6.9% to $12.75. The company’s market value has fallen by more than $5 billion from a peak after its debut in March.

The collapse means that the former president’s paper windfall has fallen from more than $5 billion to $2.3 billion in just a few weeks. However, if the shares can stay above the $17.50 mark, Trump and insiders would be in line to get another 40 million shares to distribute. Even after the latest drop, that so-called earnout would be worth $1.2 billion.

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The company registered as many as 146 million shares of common stock, as well as up to 21 million shares issuable upon exercise of warrants. The filing also recorded up to 4 million warrants to purchase common stock. All securities being registered are held by or underlying securities of existing holders of Trump Media.

Blank check

Applying to register shares for resale is common for blank check deals like the one Trump Media completed last month to become a publicly traded company. It’s worth noting that the filing does not necessarily indicate that a sale has commenced or will occur in the future.

Trump Media now needs the U.S. Securities and Exchange Commission to review the paperwork and provide any feedback before the filing is considered effective. Once that’s done, warrants and $11.50 in cash can be exchanged for stock, while insiders like the former president can get board approval to start selling shares. Insiders are currently not allowed to sell shares until September.

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The company behind Truth Social has captivated individual investors who piled into the stock as a way to show their support for Trump’s 2024 re-election campaign. n 270% increase. It is down more than 60% from an initial intraday peak.

Read more: Trump in line for additional SPAC payday despite $4.5 billion selloff

Trump is embroiled in a lawsuit with two Trump Media co-founders who claim he tried to dilute their stakes. A Delaware judge granted their request to amend the lawsuit to include allegations that Trump retaliated against them by locking up their shares for six months, which they said would cause “irreparable damage” to their finances . Trump himself is subject to the same restrictions.

Corporate lawyers said that stock freezes are common in blank-check transactions, and that allowing the co-founders to “dump” their shares on the market would “harm the company and other shareholders.”

Read more: Trump Media co-founders challenge 6-month stock freeze

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Meanwhile, Trump will begin his first criminal trial Monday in Manhattan, where he is accused of falsifying corporate records to conceal a hush money payment to a porn star before the 2016 election. It is one of four criminal charges Trump faces as he campaigns to return to the White House.

(Adds context throughout.)

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