970x250
750x300
Business

There is about to be another $1 billion social windfall for Donald Trump.

On Thursday, April 18, 2024, in New York, NY, the jury selection process for the former president Donald Trump is underway at Manhattan Criminal Court.

There is about to be another $1 billion social windfall for Donald Trump.
There is about to be another $1 billion social windfall for Donald Trump.

Since his social networking company sealed its contract to go public late last month, Trump’s net worth has fluctuated greatly. The company that has been dubbed a “meme stock on steroids” has the former president as its largest stakeholder.

Despite having dropped by half since its peak on March 27, Trump Media’s share price is still comfortably above levels that would activate the merger agreement’s performance clauses.

There is about to be another $1 billion social windfall for Donald Trump.
There is about to be another $1 billion social windfall for Donald Trump.

The former president and other pre-merger stockholders may receive more shares from Trump Media, according to SEC filings, if the dollar volume-weighted average price reaches or surpasses $12.50 for 20 trading days during a 30-day trading period starting on March 25.

READ ALSO  See the reasons behind the US decision to deny Egypt $85 million in military assistance.

If that price metric is equal to or greater than $17.50 throughout the same period of time, the entire 40 million shares would be earned.

The 20th trading day is coming up on Tuesday, and since the clock began on March 25, the price of Trump Media’s shares has never fallen below $17.50.

Given how high the share price has been, I think there’s a good chance the earnout conditions will be met at this point, according to Michael Ohlrogge, an associate professor at the NYU School of Law.

Trump’s substantial ownership

According to the merger deal, Trump will get 36 million more shares, or 90% of those earnout shares.

According to records, that would give Trump an even more commanding holding of 114.75 million shares, or 65% of all outstanding shares.

The value of this shareholding can fluctuate greatly because of the significant volatility of Trump Media’s share price.

Legal and practical limitations would probably keep Trump from profiting from this stock very soon.

Files indicate that the earnout shares Trump looks to be eligible for are subject to lock-up requirements, which prohibit insiders from borrowing against or selling their stock for months following the merger’s closing.

Experts claim that even if Trump managed to circumvent this lock-up agreement, it would be nearly impossible for him to sell a substantial portion of his holding without precipitating a sharp decline in the stock price. Trump is, after all, Truth Social’s biggest shareholder, chairman, and most well-liked user.

There is about to be another $1 billion social windfall for Donald Trump.
There is about to be another $1 billion social windfall for Donald Trump.

READ ALSO  Suhum Municipal Assembly Equips 793 artisans with certified vocational skills.

“Absolutely overpriced”

Experts caution that despite Trump Media’s share price retreating after surging to $66 last month, it is still expensive based on fundamental indicators.

Comparing a stock’s price to its revenue is a popular method of valuing stocks.

Matthew Kennedy, a senior IPO strategist at Renaissance Capital, estimates that the price-to-sales ratio of the typical social media stock is approximately 10x. Among such peer groups are Rumble, Pinterest, Snap, Reddit, and Facebook owner Meta.

Kennedy claims that, in contrast, Trump Media is trading at about 1,200 times sales.

University of Florida finance professor Jay Ritter stated, “The stock looks to be grossly overvalued.”

Ritter, who has spent 40 years researching initial public offerings (IPOs), believes that the price of a share of Trump Media will eventually drop to just $1 or $2.

Trump Media offers advice on preventing short-selling.

The share price of Trump Media is “responding primarily to non-rational factors,” according to NYU professor Ohlrogge.

Ohlrogge, for example, cited the stock’s sharp decline last week following the company’s announcement that it intended to register new shares.

“That filing shouldn’t have surprised anyone because it was only carrying out the business’s stated post-publication actions. He said that the price is determined by the “whims and sentiments of very uninformed traders, driving the price this way and that,” and that there was no actual rational reason for it to be negatively impacted.

The business said on Friday that it is increasing its efforts to collaborate with state and local authorities in support of laws governing short-term rentals that do not prohibit tenants from engaging in the profitable side business of using their property to generate additional revenue.

READ ALSO  Stellantis recalls nearly 200,000 cars due to problems with the stability control system.

However, this action is being taken as some regions are resisting the company. For instance, New York City has maintained that platforms for short-term rentals, such as Airbnb, can disrupt communities and reduce the supply of available homes, which raises rents generally. Conversely, Airbnb contends that its services can help communities and hosts financially.

There is about to be another $1 billion social windfall for Donald Trump.
There is about to be another $1 billion social windfall for Donald Trump.

Other stories

Show More
Back to top button
Design by FLY MULTIMEDIA GHANA

Adblock Detected

Please consider supporting us by disabling your ad blocker