It has been noted that fighting never-ending legal troubles, former President Donald Trump is getting some good news. It has been noted that he is expected to receive a staggering increase in wealth as he acquires 36 million additional shares of Trump Media & Technology Group, potentially increasing his net worth by over $1 billion via Trending Politics News.
The huge financial gain arises from an “earn out” provision in the merger deal that formed Trump Media & Technology Group, which owns the social media platform Truth Social. The provision, tied to the company’s stock performance, rewards Trump with additional shares if certain benchmarks are achieved as per CNBC.
It has been noted that shares of Trump Media, trading under the ticker DJT, must maintain a minimum price of $17.50 over a specific period for Trump to qualify for the bonus shares. It is noted that as of the last trading session, the stock was comfortably above this threshold, ensuring Trump’s receipt of the shares.
After receiving these shares, Trump’s total ownership in the company would exceed 114 million shares, affirming his status as the majority shareholder with about 65% of the total outstanding shares. At the current stock price of approximately $35 per share, Trump’s stake in the company would be valued at an estimated $4 billion according to CNN.
Though there is a financial windfall, Trump Media continues to struggle with profitability, posting significant losses and minimal revenue in the previous year. The discrepancy between market valuation and financial health has led some experts to label the stock as “overvalued” and predict potential volatility in its price.
The company, which went public through a merger with Digital World Acquisition Corp., initially saw its shares soar to nearly $80 but has since experienced a sharp decline.
Fortune reported:
Few stocks have been as volatile as Trump Media & Technology Group in recent weeks, but if shares can avoid a massive plunge for the next two trading days, Donald Trump’s personal fortune is set to leapfrog once again.
Trump stands to receive another 36 million shares of the company as long as shares stay above $17.50 through the end of trading Tuesday. (As of midmorning Monday, they stood at just under $36.)
Per the company’s SEC filings, the company can issue additional shares to those who had a pre-merger interest in Trump Media, including Trump himself, if the average price per share stays above $12.50 for at least 20 of the first 30 days it is traded. Tuesday will mark the 20th day of trading for the company and it has stayed well above that figure, even with the extreme ups and downs.
If the price stays above $17.50, which it has easily done, that would trigger an earning out of 40 million shares. Trump would be eligible to receive 90% of those—or 36 million. At current prices, that would be valued at over $1.25 billion, given today’s price.
At present, Trump would not be able to cash those shares in, due to lock-up restrictions, though the company’s board does have the power to waive those. As he is the company’s largest shareholder, though, any significant sale of shares by him could cause the company’s valuation to fall even further. (With this expected additional payout, he will own 114.75 million shares of the company, 65% of its total stock.)
Analysts are skeptical of Trump Media, saying the company is overvalued and the stock price does not accurately reflect the company’s fundamentals.
Trump Media lost $49 million in the first nine months of last year, when it brought in just $3.4 million in revenue. In the past month, the company’s market cap has fallen from $10 billion to $4.78 billion. Shares were down 4% in midmorning trading Monday.
