Trump Media shares jump as ex-president says he will keep his stake
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Shares in Trump Media & Technology Group jumped as much as 27 per cent on Friday after Donald Trump, the former US president and the social media group’s majority owner, said he had no plans to sell his stake.
The operator of the Truth Social platform went public through a merger with a special acquisition company earlier this year. Its share price briefly jumped above $66 in March but had fallen by three-quarters to below $17 until Trump’s comments.
“No, I’m not selling, no, I love it,” Trump said at a press conference in California on Friday afternoon, adding of the shares: “People think that I’m leaving, that’s why they’re down, because you know it’s different if I leave, but I’m not leaving.”
The former president made his pledge to hold his shares about a week before restrictions barring him from selling stock are set to lift, opening up a potential multibillion-dollar windfall.
Trump owns about 57 per cent of the company, which had a market cap of about $3.7bn at Friday’s close, according to a recent regulatory filing and data from AlphaSense. That valued Trump’s stake at about $2bn.
The battered share price and high concentration of stock Trump owns had posed a conundrum: cashing out could hand him a substantial sum, but could also depress his company’s valuation further.
“It’s a huge windfall of virtually free money for him — and that’s hard for anyone to resist,” said Steve Sosnick, chief market strategist at Interactive Brokers. “But how much is profit versus politics is hard to say. If there’s a lot of small investors who are part of the Maga base, he may not want to antagonise them. What if some big donors are shareholders?”
The volatile stock price of the company, which has yet to turn a profit, has in part reflected sentiment about Trump’s political fortunes. It surged earlier this year when he pulled ahead in the polls while facing an election rematch against President Joe Biden, and traded at record volumes in mid-July after Trump survived an assassination attempt in Pennsylvania.
But the company’s valuation has slowly atrophied over the summer, and it fell further this week after Trump’s first debate with vice-president Kamala Harris in which she was widely declared the victor. Harris has enjoyed positive momentum since replacing Biden as the Democratic nominee in what will be Trump’s third consecutive campaign as the Republican candidate.
“The stock has functioned in some ways as sort of a call option on a Trump victory,” Sosnick said. “If he wins, you can come up with scenarios where the company could become must-watch social media but it’s hard to imagine its prospects improve if he doesn’t win.”
The shares gave up some of their gains on Friday afternoon, closing at $17.97, up 12 per cent on the day. Trump’s eligibility to sell his stake could be delayed if the stock falls below $12.
The company’s multibillion-dollar valuation contrasts with its relatively small revenues and a record of losses. In the three months to June its net sales fell from $1.2mn to $837,000, while its net loss fell from $22.8mn to $16.4mn.