New Lows
The executives at former president Donald Trump’s Truth Social venture are officially starting to cash out of its meme stock.
According to a recent filing with the Securities and Exchange Commission, Trump Media & Technology Group (TMTG) CFO and treasurer Juhan Phillip has already sold a whopping $1.9 million worth of company shares.
CEO Devin Nunes and COO Andrew Northwall joined in as well, selling chunks of their holdings.
Meanwhile, Trump is likely also getting ready to offload his 114 million TMTG shares — roughly 60 percent of the company’s outstanding stock — as soon as next month. The six-month lockup period determined by the SEC is set to expire as soon as September 20, clearing the way for Trump to pull out.
As Quartz reports, Trump could make upwards of $2 billion, a hefty sum — but a fraction of what he could’ve gotten away with earlier this year, before the price inevitably crashed.
The selloff, however, could prove devastating to investors who somehow still haven’t jumped ship. Shares have been on a rollercoaster ride, plummeting to record lows this month. If Trump were to sell, shares would likely continue their freefall.
Jumping Ship
Trump Media & Technology Group, which owns Truth Social, ballooned to an all-time high valuation of almost $8 billion when it merged with a blank check acquisition company in March. With crashing shares, that valuation has shrunk by almost half since then.
Despite its multibillion-dollar valuation, the company’s finances have been nothing short of abysmal. The company reported a net loss of $58 million last year, with revenues barely making a dent at just $4.1 million. In the last quarter alone, the company reported a net loss of $16.4 million.
In simple terms, the meme stock is astronomically overvalued and not much more than a thinly veiled attempt by Trump to raise some much-needed cash from true believers and special interests looking to skirt campaign finance rules.
Now the ruse is almost up, with executives starting to pull out. If Trump were to lose to vice president Kamala Harris in the upcoming election, TMTG would be on even thinner ice, according to experts.
“It’s purchasing his brand,” vice president of research at Morningstar John Rekenthaler told Quartz. “But he’s not going to have a brand if he loses a second straight presidential election.”
With a second loss, the stock could “go to zero,” Rekenthaler predicted.
Whether that would come as a disappointment to Trump is unlikely. The former president has already made more than $1 billion in earnout shares and could easily net another $2 billion soon.
“This is very likely to be his single most successful enterprise,” Rekenthaler argued.
More on TMTG: Trump’s “Truth Social” Stock Hits All-Time Low After Going Public
Source Agencies
