Consider waking up one morning only to find out that billions of your dollars are gone. Well, that’s pretty much the situation former President Donald Trump finds himself with Trump Media & Technology Group (TMTG). If you haven’t heard of it, TMTG owns Truth Social, a social media platform that was supposed to be the new competitor in the likes of X (formerly twitter). It was good to go for sometime, but now the value of Trump’s media stake is declining even more.
A $6 Billion Shrinkage in Four Months
Trump Media, however, floated its operations in March through a merger with a blank-check firm or a special acquisition company. For a while the tourist traded bumped up, and it appeared Trump was landing yet another victory for his companies. However, for now, this company has reduced by $6 billion over the last four months alone.
Trump, who has a 60/40 stake in the company, has been deeply hurt financially. The stake he once held was estimated to be about $6. 2 billion and it is now worth approximately $2. 1 billion.
So, Why the Drop?
We have got so many factors here. One big reason is something called a ‘lockup agreement.’ Basically, it means the big shareholders–like Trump–were forbidden by stock lock-up agreement from selling their shares until September 19. Thus, while the stock price was decreasing, both were unable to do anything but lose their paper wealth.
Once that lockup period expires, many insiders may want to dispose their shares in the market out of necessity. And if everyone rushes to sell, then the price per share can go even lower than today, Wells said.
Who Else Is Losing?
Laypeople and even professional analysts aren’t the only ones seeing their wealth diminish under Trump. Sadly, two pal of his from The Apprentice – Andy Litinsky and Wes Moss who have assisted in the development of the company have invested over $500 million and lost it.
Enterprise becomes even more complicated when one discovers that all three of these men; Litinsky, Moss, and Orlando have entangled themselves into law suits.
Trump has maintained the Situation
And all the while, Trump has openly declared that he is not at all interested in selling off his stocks in the near future. Thus, some words in the article include the following: “I’m not going to sell my shares,” he was quoted as saying at a gathering. “I don’t need the money. ” As much as he considers the company to be his business venture, it was his ‘great voice. ’ However, some investors may not wait until the company establishes itself.
This is actually a fact though Trump laughing that he will become the next president, the stock price of his media company keeps falling and the investors are eagerly waiting for the new changes.
The X Factor (Literally)
Recently, Trump has logged back into Elon Musk’s X (previously referred to as Twitter). While he is the figurehead of Truth Social, he has been fairly engaged on X, which might have worried some investors. They must be wondering, “If he is invested in X so much, what about the company he is supposed to represent?”
The Meme Stock Effect
Some skeptics have already begun comparing Trump Media to “meme stocks,” which are popular stocks that retail investors gravitate to for various reasons but often have questionable valuation metrics. Despite the fact that Trump’s company is worth more than $3 billion, its sales in the second quarter of 2015 were below $1 million. That’s a big gap.
People investing their money are eager to confirm whether things shall remain still or turn more unpredictable. So when his political positions are in the balance so too may be the future of the media company Trump has built for himself.
What’s Next?
Experts opine that if Trump really wanted to, he could cause the prices to drop even further because with his access to information and power, he could very well sell his shares which would introduce a lot of stock into the market. However, if he wants to hang on, there may still be a chance to save the company.
