Trump Media’s future is becoming even more uncertain.
The parent company of Truth Social, the social media company majority-owned by former president Donald Trump, is turning a complicated corner on Thursday. A lockup on insider sales is due to expire—meaning that Trump could start cashing in his 57% stake, which is currently valued at about $2 billion.
Shares in Trump Media fell more than 4% on Thursday morning, at one point hitting an all-time low of $14.77. The share price is down nearly 80% since Trump Media went public in March. (The stock trades under the ticker DJT, for “Donald J. Trump.”)
Trump said last week that he has “absolutely no intention of selling” his stake in Truth Social. Some investors take him at his word, at least for the time being, since such a sale would likely further depress the price of Trump Media’s shares.
“The stock price of Truth Social is like his crowd size,” said professional investor Matthew Tuttle, in a reference to Trump’s ongoing fixation with the attendance at his rallies and other campaign events.
“He’s not going to want to see the stock price go down. And if he sells, it is going to do down,” says Tuttle, who runs the investment firm Tuttle Capital Management, and who used to trade the Trump Media stock personally.
But now that the lockup is expiring, Trump is free to eventually change his mind and cash in some of his stock.
Trump Media did not respond to a request for comment from NPR.
Truth Social’s future is also tied to the election
Trump Media is a quintessential meme stock, bought and sold more for what it stands for than for any underlying business performance.
The company reported a loss of more than $16 million in its most recent quarterly earnings, and there are signs that demand for its core product is waning. Trump started Truth Social as a conservative social-media network in 2022, after he was banned from Twitter.
But since Elon Musk has taken over Twitter, now X, Trump has been welcomed back. Earlier this week, the former president even debuted his latest business venture, a crypto platform, with an interview on X.
Many investors in Trump Media are the former president’s most loyal supporters, so the company’s share performance has become a Wall Street weathervane for how investors think Trump’s election campaign is going.
The shares rallied in July, after Trump survived an assassination attempt and while he was still running against President Biden. But last week, the shares plunged in the wake of Trump’s debate with Vice President Harris.
Ultimately, the future of Truth Social will likely hinge on the outcome of the election. Its shares will likely do better if Trump wins in November, even if his ownership of the business would raise major concerns about conflicts of interest.
However, if Trump loses in November, the outcome will likely be bad news for Truth Social and its other investors.
Trading Trump Media’s stock today “is entirely an election play on whether he gets elected or not,” says Tuttle. “This zooms up if he wins—and it eventually goes to zero if he loses.”
Transcript:
LEILA FADEL, HOST:
Donald Trump is facing a financial and political dilemma. Today is the day he can start cashing in on the company behind his Truth Social network. But that could tank the price of the stock, hurting his loyal supporters. NPR finance correspondent Maria Aspan joins us now to talk about all this. Good morning.
MARIA ASPAN, BYLINE: Good morning, Leila.
FADEL: OK. So Trump is in this tricky position where his own financial interests and those of his supporters could be in conflict. How did he get here?
ASPAN: So Trump Media & Technology Group, which trades under the stock ticker DJT, is the parent company of Truth Social. That’s the conservative social media network that Trump started after he got kicked off of Twitter. Trump Media went public in March through a reverse merger. Now, Trump owns more than half of the company, meaning his stake is currently worth about $2 billion on paper. However, he hasn’t been able to cash in on that stake. There’s been a so-called lockup period on insider sales for several months after the company started trading publicly. Now that lockup period is due to expire as soon as today, so everyone’s watching to see if and when Trump will sell.
FADEL: And what’s the thinking on what Trump might do?
ASPAN: So he did say last week that he has, quote, “absolutely no intention of selling.” And the investors I’ve spoken with believe him for now. But now that the lockup is expiring, he will be able to change his mind and sell later on. And I should note that I did reach out to Trump Media, which did not respond to my request for comment this week.
FADEL: And how’s the stock doing?
ASPAN: Not well.
FADEL: Oh.
ASPAN: The shares closed yesterday under $16, which is down more than 75% since they went public. I mean, this is the definition of a meme stock. Trading is extremely volatile. And for the most part, people don’t buy and sell it because they think this is a good business. Frankly, Truth Social is not a good business. It’s lost, like, $16 million in the last quarter.
FADEL: All right, Maria, then why would anyone buy and sell that stock?
ASPAN: Well, for reasons that aren’t simply financial. I mean, a lot of the investors are individuals who are loyal Trump supporters who want to show their support. Some also believe that he’s got a good chance of winning the presidential election in November, and so investing in Truth Social is also betting on that outcome.
FADEL: OK.
ASPAN: I mean, for all the conflicts of interest it raises, Truth Social will be in a great position if the guy who owns a majority of the company is also in the Oval Office. I did talk about this with Matthew Tuttle, who runs an investment firm called Tuttle Capital Management. And he used to trade some of the Trump Media stock personally.
MATTHEW TUTTLE: It is entirely an election play on whether he gets elected or not. This zooms up if he wins, and it eventually goes to zero if he loses.
ASPAN: And Tuttle did tell me that he doesn’t expect Trump to make a decision to sell his stake in Trump Media until the election.
FADEL: And how closely do you think the future of Truth Social is tied to the outcome of the election?
ASPAN: Oh, pretty closely. I mean, we’ve seen this in the last few months, which have not been good for the stock or for what it says about Trump’s chances. We saw a stock rally in July after he survived an assassination attempt, and that was before President Biden ended his reelection campaign. But there’s been a big drop since last week after Trump debated Vice President Harris, and the shares are still pretty down this week. So we will continue to watch it closely, and I do think it’s fair to say that whatever else happens with Truth Social, it’s a safe bet that there will certainly be more volatility.
FADEL: NPR finance correspondent Maria Aspan. Thank you, Maria.
ASPAN: Thank you.
(SOUNDBITE OF TONIC WALTER’S “INTO THE NIGHT”)