Donald Trump Risks Financial Setback if His Stock Price Keeps Sliding

Donald Trump’s Truth Social stock could bring him financial woes if its share value continues to decline.

Trump owns almost 60 percent (78.75 million shares) of Trump Media & Technology Group (TMTG) whose primary asset is the social media platform Truth Social. Earlier this year, shareholders of Digital World Acquisition Corp., a special-purpose acquisition company or SPAC, agreed to merge with TMTG. SPACs are shell companies created to raise capital through an initial public offering (IPO) to acquire or merge with a private company.

As part of the merger deal, TMTG will dish out 40 million new “earnout” shares to company insiders if the stock doesn’t slide further, according to regulatory filings. Earnouts are a type of purchase agreement where shares may be issued post-merger contingent upon the performance of the business after the sale.

However, the stock must trade above $17.50 for 20 days of a 30-day period over the next three years for this windfall to be realized. If the share price falls below a certain level, the additional shares will not be issued, meaning those who have invested in the stock, like Trump, will not benefit from extra shares.

If TMTG trades above $15 per share, certain holders—including Trump—will share 30 million shares. If the price falls to $12.50 per share, the group will split 15 million shares.

However, since the company went public, its stock value, which initially surged, has declined, raising concerns. When TMTG debuted on the stock market, the shares, which trade under the former president’s initials “DJT,” initially surged above $78, closing its first day of trading 16 percent higher at $57.99 and giving the company a valuation of $11 billion. The value of each TMTG share reached $71.9 on March 27, before its profit and loss figures were released.

On April 17, Google Finance data showed the value of each share at $22.84. This is the lowest the share price has been since January 16—three months ago—when Digital World shares changed hands at $22.35, meaning the share price is a little more than before it merged with Trump’s Truth Social. On April 18, the share value increased slightly to $26.40.

Meanwhile, a regulatory filing to the Securities and Exchange Commission earlier this month revealed that Truth Social made just over $4.1 million in revenue in its last operating year, but racked up $58.2 million in costs. It showed an operating loss of almost $16 million.

BF Borgers of Colorado, an auditor for the company, said the losses “raise substantial doubt about its ability to continue as a going concern,” according to the filings.

Newsweek contacted TMTG by email outside of business hours to comment on this story.

Truth Social launched in February 2022, about a year after Trump was banned from X and Facebook for posts about the Capitol riots. He has since been reinstated to the platforms but opts to use Truth Social, alongside some 500,000 active users through iOS and Android platforms.

X, on the other hand, had 75 million users, while Facebook registered 142 million active users.

A spokesperson from the company previously told Newsweek: “Truth Social created a free-speech beachhead against Big Tech for a fraction of the start-up and operating costs that the legacy tech corporations incurred. We have no debt, more than $200 million in the bank, and the support of hundreds of thousands of retail investors, who fervently believe in our mission.”