The volatile Trump Media stock will face a crucial day. Donald Trump and other insider investors in the Truth Social parent company will be able to sell shares as the lockup period after the March merger with a blank-check firm expires.
Until now, Trump has been barred from selling his stake in the social media company, which trades under the ticker DJT, under the terms of a lockup agreement. It's a common occurrence for special-purpose acquisition companies.
Trump Media went public in March this year through a merger with SPAC Digital World Acquisition Corp. According to the merger agreement, Trump will be allowed to begin selling DJT stock if the share price remains above $12 for any 20 trading days following the 150 days after the closing of the DWAC deal, which it so far has done. If the stock dips to below $12 by Friday, Trump can instead begin to sell on Sept. 25.
Trump said last week he won't sell shares, which sent the stock soaring. "They're worth billions of dollars. But I don't want to sell my shares. I'm not going to sell my shares. I don't need money," Trump said at a press conference in Rancho Palos Verdes last week.
If he changes his mind and decides to sell anyway, lawyers say he could face legal problems, MarketWatch reported.
Based on the current market valuation of about $3.1 billion, Trump's investment is worth roughly $1.8 billion.
But Trump isn't the only insider -- someone with access to nonpublic information about the company -- who will be able to sell once the lockup expires.
While Trump controls 57% of the Truth Social parent company, ARC Global Investments owns 4.8%, and United Atlantic Ventures 3.8%, according to FactSet.
Share sales by these insiders could also drive down the share price.
DJT stock closed down 5.9% at $14.70 on Thursday. The S&P 500 was up 1.7%.
The stock hit an intraday high of $79.38 on March 26 after the merger closed, and has slid steadily ever since. DJT shares were down about 80% from that high as of Wednesday's close.
The company tends to trade more in line with expectations for a second Trump administration than on fundamentals such as sales and profit margins or traditional valuation metrics.
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