Trump’s $2 Billion Truth Social Stake Could Soon Be Accessible, But Selling Will Be Tough

Former President Donald Trump is on the verge of accessing his $2.3 billion stake in Truth Social, his social media venture, as a lock-up period preventing him from selling or borrowing against the shares is set to expire on September 25. However, turning this stake into cash might not be straightforward.

Trump’s investment in Trump Media & Technology Group, which owns Truth Social, is currently facing significant hurdles. The company’s stock has plummeted, making it challenging for Trump to sell a large portion without drastically affecting the stock price. “It would be almost impossible for Trump to liquidate a major part of his shares without crashing the stock,” said Michael Ohlrogge, a financial regulation expert at NYU School of Law.

The stock has already dropped sharply. On Wednesday, Trump Media’s shares fell below $20 for the first time since the company’s merger earlier this year, reflecting a 70% decline in value since March. This dramatic drop has significantly reduced the worth of Trump’s holdings, which were once valued at $6.2 billion in May.

The lock-up period for Trump’s shares is scheduled to lift on September 25, but it could end earlier if Trump Media’s share price stays at or above $12 for 20 out of 30 trading days starting August 22.

Selling a substantial amount of stock could shake investor confidence. “If Trump were to offload a lot of shares, it might appear as if he’s losing faith in the company, which could drive the price down further,” said Charles Whitehead, a business law professor at Cornell.

Adding to the problem, some Trump Media insiders, including CFO Phillip Juhan and CEO Devin Nunes, have recently sold their shares, possibly contributing to the stock’s decline.

Experts also argue that Trump Media’s current valuation of nearly $4 billion seems excessive, given the company’s modest revenue of $837,000 last quarter. “The valuation is grossly overestimated,” said Jay Ritter, a finance professor at the University of Florida. “The company’s fundamentals don’t support such a high value.”

Even if Trump can’t sell the shares easily, he might still leverage his investment. After the lock-up ends, Trump could use his shares as collateral for a loan. However, securing such a loan could be challenging, given past controversies. Alternatively, wealthy supporters might step in to help, either for financial gain or political favor.

In any case, while Trump may soon have access to his social media fortune, converting it into usable funds will involve navigating a complex and potentially damaging financial landscape.