By Medha Singh and Noel Randewich
(Reuters) – While former U.S. President Donald Trump has said he will not sell his $1.7 billion stake in Trump Media after restrictions are likely to expire on Thursday, other insiders could soon cash in on his profits.
Trump Media & Technology Group is 57 percent owned by the Republican presidential candidate, who told reporters Friday he has no plans to sell his shares.
Other major shareholders who could soon sell their shares include United Atlantic Ventures and Patrick Orlando, whose fund, ARC Global Investments II, sponsored the blank-check company that merged with Trump Media in March. The two together own 11% of Trump Media, according to a filing with the company.
“Even if Trump doesn’t do it, it would be interesting to see other insiders start selling because that would be a clue as to what they think his mindset is on selling,” said Steve Sosnick, chief strategist at Interactive Brokers.
Trump Media executives could sell their shares as soon as the bell rings on Thursday if the stock ends the regular trading session at $12 or higher, according to a provision in the company’s prospectus.
Shares fell 4% to $15, extending steep losses in recent weeks fueled by concerns about the end of a so-called lockup period tied to its stock market debut in March.
Trump and other insiders, including Chief Operating Officer Andrew Northwall, Chief Technology Officer Vladimir Novachki and CEO Donald Trump Jr., did not respond to Reuters requests for comment on their plans once the blackout expires.
Trump Media did not respond to a request for comment.
The size of ARC’s stake in Trump Media is in dispute. A Delaware judge ruled this week that ARC Global should receive 8.19 million shares of Trump Media, more than the roughly 7 million shares the company has said ARC was entitled to.
Separately, Truth Social co-founders Andy Litinsky and Wes Moss have also sued TMTG for damages for preventing them from selling their shares earlier.
Orlando and Moss did not immediately respond to requests for comment, while Litinsky could not be reached for comment.
Newly listed companies often see pressure on their shares before the end of their lock-up period, when insiders are free to sell their often sizable stakes.
Trump Media, which operates the Truth Social app, saw its value soar to nearly $10 billion following its Wall Street debut, fueled by retail traders and merchants who see it as a speculative bet on his chances of securing a second four-year term as president.
However, since reaching that peak, Trump Media shares have since lost most of their value, with declines accelerating in recent weeks after President Joe Biden dropped his reelection bid on July 21 and Trump lost a lead in opinion polls ahead of the Nov. 5 presidential election to Democratic vice presidential nominee Kamala Harris. Betting markets now show Harris holding a modest lead over Trump in a tight race.
Trump Media’s revenue is equivalent to two Starbucks coffee shops, and strategists say its $3 billion stock market value bears no relation to its day-to-day business.
Its shares trade at the equivalent of more than 1,000 times revenue, far exceeding the valuation of even artificial intelligence superstar Nvidia, which recently traded at 24 times revenue.
“The market could not absorb even a partial stake sale without some material damage to the stock,” Sosnick said.
“Ultimately, much will depend on whether (Trump) keeps his word not to sell, while the company’s long-term prospects depend entirely on his electoral prospects.”
Insider ownership as % of outstanding shares
TMTG Shares
Donald Trump 56.6%
United Atlantic 5.5%
LLC Companies
ARC Global 5.5%
Investments
Phillip Juhan 0.2%
Devin Nunes 0.06%
Scott Glabe 0.01%
(Reporting by Noel Randewich and Medha Singh; Additional reporting by Lance Tupper and Tom Hals; Editing by Megan Davies and Diane Craft)
