Trump Media, the owner of Truth Social, is set to begin trading publicly following the approval of a merger deal by investors. The new company, called Trump Media & Technology Group, will trade under the ticker symbol DJT and will encompass Trump’s social media platform. Trump will hold a dominant stake in the public company, with shares currently valued at over $3 billion, although there are legal and financial concerns regarding his ability to monetize this stake.
Despite the potential financial windfall for Trump, experts warn that the stock price of Trump Media is drastically overvalued based on the company’s actual revenue and user data. Truth Social, in particular, has seen a decline in monthly active users, making it challenging to justify the company’s valuation of over $6 billion. This has led some to classify Trump Media as a meme stock, with the price divorced from its fundamental value and reliant on speculation.
The liquidity of Trump’s stake in Trump Media presents another challenge, as restrictions on selling or pledging the stock for a specified period prevent immediate access to cash. Lock-up agreements with key shareholders, including management, prohibit them from selling or pledging their shares for six months following the deal’s closure. Even if Trump attempted to overcome these obstacles, the likelihood of banks accepting the stock as collateral for a loan remains uncertain.
The uncertainty surrounding the merger deal continues to raise legal and financial concerns for Trump and his ability to navigate his current financial challenges. Despite the potential for a significant stake in a public company, the practical limitations on monetizing this stake present a complex financial landscape for Trump. The initial excitement around the merger may be tempered by the reality of the company’s overvaluation and the restrictions on selling or pledging shares. Only time will tell how Trump navigates these challenges and whether the merger deal will ultimately benefit him financially.
