Trump Media & Technology Group Faces Stock Pressure Ahead of Insider Selling Restrictions
Shares of Donald Trump’s media company, Trump Media & Technology Group, have experienced a second consecutive session of decline as the end of restrictions on share sales by the former U.S. president and other insiders looms. The company, of which Trump owns 57%, saw a 3.6% drop in its stock price on Tuesday, bringing its total loss for the week to 7%.
The stock had surged 12% on Friday after Trump announced that he has no intentions of selling his $1.9 billion stake in the company, a move that reversed weeks of losses primarily tied to concerns about the expiration of insider trading restrictions associated with its market debut in March.
As the lock-up restrictions near their end, newly listed companies often experience downward pressure on their stock prices amid expectations of potential insider selling that could flood the market. Trump Media, known for its operation of the Truth Social app, had initially seen its valuation soar to nearly $10 billion following its Wall Street debut, fueled by retail traders and Trump supporters who viewed it as a speculative investment on Trump’s chances of securing a second presidential term.
Aside from Trump, other insiders at Trump Media set to begin selling their shares when the lock-up period concludes include United Atlantic Ventures and Patrick Orlando, who together own 11% of the company. Despite its initial valuation, Trump Media currently has a market capitalization of $3.3 billion, with shares trading at $16.68, representing a significant drop from their peak closing price of over $66 in March.
The downward trend in Trump Media’s stock price has intensified recently as a result of President Joe Biden opting out of a reelection bid and Trump lagging in opinion polls leading up to the Nov. 5 presidential election. Financially, the company’s revenue is equivalent to that of just two Starbucks coffee shops, and it is facing a cash burn situation.
If Trump Media’s share price remains at or above $12 by Thursday, Trump and other insiders will have the freedom to start selling shares from Friday onwards. Otherwise, the selling window will open on Sept. 26.
For more financial news and insights, stay tuned to Extreme Investor Network.