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Donald Trump’s Incentive Package
Former President Donald Trump’s involvement in Trump Media & Technology Group could lead to him earning substantial shares in the company based on specific performance thresholds. According to a recent filing with the Securities and Exchange Commission, Trump stands to receive 36 million earnout shares if Trump Media’s dollar volume-weighted average price (DVWAP) reaches at least $12.50 for a minimum of 20 trading days within a 30-day period.
Performance-Based Share Distribution
If the DVWAP exceeds $12.50 on any 20 days within the set timeframe, shareholders will receive 15 million shares. At $15, they will be entitled to 15 million shares, while at $17.50, they will receive 10 million shares. In the event that all 40 million of these shares are issued, Trump could claim as much as 90% of them, amounting to 36 million shares.
Trump Media’s Market Performance
Trump Media, the entity responsible for launching Truth Social, became publicly traded on the Nasdaq under the ticker DJT following its merger with Digital World Acquisition Corp., a Special Purpose Acquisition Company (SPAC). As of Monday, the company’s share price closed at less than $27, resulting in a market capitalization of approximately $3.65 billion, significantly lower than its initial trading week highs.
The company recently filed to register the resale of nearly 21.5 million new shares of common stock along with approximately 146 million shares of common stock and 4 million warrants to acquire common stock. Despite this offering, certain shares held by insiders remain restricted from trading until 5-6 months after the IPO lock-up agreement expires.
Share Resale and Market Impact
The number of shares available for resale by Trump Media now totals 256% of the company’s public float and 107% of its outstanding shares as of January 31st. While the recent closing price of $32.59 represents the share value for the resale, the company suggests that shareholders may still realize a positive return on their investment.
Challenges and Financial Losses
Trump Media’s stock faced a sharp decline shortly after its public debut, attributed to the disclosure of an operational loss of nearly $16 million in 2023, alongside interest expenses amounting to $39.4 million, with only $4.1 million in revenue. This stands in contrast to the $23.2 million operational loss and $2 million interest expense on $1.5 million in revenue reported in 2022, based on previous regulatory filings.
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