Former President Donald Trump, a multi-billionaire, is trying to appeal a judgment against him in New York state, and on Monday he saw his bond lowered from $454 million to $175 million. For the bond, Trump has until April 4 to post $175 million in cash or stocks able to be sold quickly.
Now, with the social network Truth Social going public, Trump has amassed a stake worth roughly $5.5 billion.
Still, board members will decide when — or whether — to let him cash in.
The board of Truth Social’s parent company includes one of Trump’s sons, a former member of the House Republican Caucus, and three former members of Trump’s presidential Cabinet.
“Typically, people involved in the type of deals that brought Truth Social to the stock market aren’t allowed to sell or borrow against their shares for six months,” Wall Street Journal finance reporter Amrith Ramkumar wrote Tuesday.
“The seven-member board would need to grant Trump a waiver if he wished to make such moves before then. That isn’t unheard of, but boards typically wait a month or more before letting a big owner sell. They risk setting off a flood of selling that could cause big losses for independent investors.”
Truth Social’s parent company has criticized the media’s attempts to divine Trump’s apparent plans for posting a bond.
Parent company spokesperson Shannon Devine slammed the reporter’s comments as “clearly the latest in a long line of sloppy, poorly researched hit pieces on Truth Social by The Wall Street Journal.”
Shares of Donald Trump’s social media company jumped nearly 40% in the first day of trading on the Nasdaq, boosting the value of Trump’s large holdings in the company as well as the smaller stakes of supporters who purchased shares as a show of support for the former president.
Trump Media & Technology Group Corp. was acquired Monday by a blank-check company called Digital World Acquisition Corp. Trump Media, which runs the social media platform Truth Social, has now taken Digital World’s place on the Nasdaq stock exchange.
Before trading began, Trump Media had a market value of about $6.8 billion, a figure rising after early, unstable gains in the shares.
Trump holds a nearly 60% ownership stake in the company. As of 9:45 a.m. ET, the shares were up 39% to $69.52.
Many of Trump Media’s investors are small-timers either trying to support Trump or aiming to cash in on the mania, instead of big institutional and professional investors. Those shareholders helped the stock of Digital World more than double this year in anticipation of the merger going through.
These investors could experience a bumpy ride. For one, they’re betting on a company with vague prospects of turning a profit. Trump Media lost $49 million in the first nine months of last year, when it brought in just $3.4 million in revenue and had to pay $37.7 million in interest expenses. In a recent regulatory filing, the company cited the high rate of failure for new social media platforms, as well as the company’s expectation that it will lose money on its operations “for the foreseeable future” as risks for investors.
Research firm Similarweb estimates that Truth Social had roughly 5 million active mobile and web users in February. That’s far below TikTok’s more than 2 billion and Facebook’s 3 billion — but still higher than other “alt-tech” rivals like Parler and Gettr. In fact, Gettr had less than 2 million visitors in February.
Besides competition in the social media field, Trump Media faces other risks — including to some degree Trump.
Trump Media, which is based in Palm Beach, Florida, said in a regulatory filing that it “is highly dependent on the popularity and presence of President Trump.” If the former president were to limit or discontinue his relationship with the company for any reason, including due to his campaign to regain the presidency, the company “would be significantly disadvantaged.”
Another risk, the company said, was that as a controlling stockholder, Trump would be entitled to vote his shares in his own interest, which may not always be in the interests of all the shareholders generally.
If recent trading activity is any indication, investors should expect the shares to be volatile. Digital World shares more than doubled this year ahead of a shareholder vote on the merger with Trump Media. After the vote Friday, shares dropped almost 14%, but Monday they rebounded strongly with a gain of 35%.
Still, Trump remains optimistic. On Monday, Trump told reporters outside a New York courthouse, “Truth Social is doing very well. It’s hot as a pistol and doing great.”
“Nobody really knows how it’s going to go,” SPACInsider founder Kristi Marvin told Wall Street Journal for its hit piece.
“But it will definitely be fascinating to watch.”