Former President Donald Trump is set to be awarded an additional 36 million shares of Trump Media on Tuesday. This “earnout” bonus is valued at over $1.25 billion, based on Monday’s price.
Trump Media, the owner of the Truth Social app, concluded trading on Monday with a closing price of $35.50 per share. This marks a decrease of 2.42% and is approximately half the initial public trading price of the DJT ticker in late March.
The closing price, however, still exceeds the minimum share price benchmark of $17.50 that Trump Media needs to reach by the end of Tuesday’s trading session in order for the former president to qualify for the additional earnout shares.
The earnout agreement depends on the benchmark being met for 20 consecutive trading days within a 30-day period starting from March 25. Today is the 20th day, and it is highly improbable that DJT will drop below the benchmark price by the end of today’s trading session.
Trump appears to be on track to receive an additional 36 million shares, which will be added to his existing ownership of 78.75 million shares as the company’s majority shareholder.
When the earnout shares are included with his current stock, Trump’s total stake in Trump Media would exceed $4 billion on paper, at a value of $35 per share.
Trump Media has the authority to issue a total of 40 million earnout shares. This authority was granted as part of the merger deal that brought together Trump Media and Digital World Acquisition Corp, a publicly traded shell company.
According to a securities filing, President Donald J. Trump will receive 36,000,000 Earnout Shares assuming they are fully issued. The filing also indicates that the remaining shares may be distributed to the executive officers of Trump Media as part of their incentive plan.
Donald Trump was present in a New York City courtroom on Monday, attentively listening to the start of the trial concerning his criminal hush money case. The court proceedings will continue on Tuesday for the presumptive Republican presidential nominee.
The merged company, known as Trump Media & Technology Group Corp., started trading publicly on March 26 under the DJT ticker symbol, with an initial share price of $70.90.
The price surged to a peak of almost $80 on that particular day, causing the company to briefly attain a market capitalization exceeding $9 billion. This remarkable achievement occurred despite the fact that the company had disclosed a net loss of $58 million for 2023 and generated a mere $4.1 million in revenue.
However, the share price of Trump Media has plummeted since then. As of April 15, the closing price saw a significant drop of almost 68% compared to its initial opening price.
Last week witnessed a significant surge in the stock price. However, as of Monday, Trump Media shares continued to trade at a level approximately 50% below their initial price, resulting in the loss of billions of dollars in market capitalization for the company.
In January, the stock traded at the benchmark minimum share price of $17.50, just before the Securities and Exchange Commission approved the merger plans of DWAC and Trump Media.
The issuance of the earnout shares to Trump may have an impact on the share price of Trump Media in the future.
During the six months after the merger’s closing date, Trump is not allowed to sell any of the shares he owns due to a lock-up provision.
The provision that allows Trump Media’s board to make amendments has not been exercised so far.
CNBC reached out to a company spokeswoman to inquire about the anticipated activation of Trump’s earnout shares.
Trump Media, with over $200 million in its bank and no debt, is fulfilling all its obligations regarding the merger and swiftly progressing with its business plan. In response to the current situation, she stated, “With more than $200 million in the bank and zero debt, Trump Media is fulfilling all its obligations related to the merger and rapidly moving forward with its business plan.”
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