Former President Donald Trump and a handful of other investors are finally going to be able to do what they want with shares in the parent company of Truth Social — the social media platform that has become Trump’s main online megaphone.

A lockup agreement that had barred those investors from selling their shares expired at 4 p.m. Eastern time Thursday. The six-month lockup, which applied to all large shareholders of Trump Media & Technology Group, had been in place since the social media company completed its merger with a cash-rich public shell company.

On Thursday, Trump Media’s shares fell nearly 6%.

Investors have been focused mostly on Trump’s plans for his stock. Trump, the Republican nominee for president, said last week that he had no intention of selling his shares. His major stake in the company, 115 million shares, is worth close to $1.8 billion, and his involvement with Truth Social is critical to its future.

But other large investors, who collectively control more than 20 million shares, may well begin selling once the lockup expires. They include two contestants from “The Apprentice” who helped start Trump Media and a group of early investors in the shell company that Trump Media merged with in March.

Even with Trump holding tight to his shares, the company’s stock price could slide if those other investors sell. The stock is already down more than 76% from its post-merger high six months ago.

Any new shares that are sold into the market will make it easier for bearish investors to short Trump Media’s stock, said S3 Partners. In a report Thursday, the stock research firm said an increase in shares available to trade may permit short sellers to borrow stock from brokerages in order to close out their positions and book a profit.

S3 said if the stock price keeps falling, “momentum short sellers will be clamoring to get into the trade.”

Here’s how any sizable sale would work and why it has drawn so much interest.

How Will We Know Someone Is Selling?

If Trump were to sell at some point, he would have to disclose those transactions in a regulatory filing with the Securities and Exchange Commission within two to five days. Other shareholders may also have to disclose sales, depending on how much stock they own.

Another way to tell if shareholders are selling is to look for a spike in the trading volume of Trump Media shares. On any given day, about 9 million shares of Trump Media are traded. If the volume surges above that level and the price of Trump Media stock drops, it’s a good bet some big shareholders are cashing out.

Why Were People Worried Trump Would Sell?

If Trump were to sell his shares, it might indicate a lack of support for Trump Media, which is losing money and generates meager revenue from advertising on Truth Social that caters to a conservative audience.

A flood of shares into the market could also crater the stock, hurting the roughly 600,000 small investors who own it and tend to be supporters of the former president.

Trump’s 57% stake in the company has fallen by more than $4 billion over the past few months.

What Else Could Trump Do with the Stock?

One option could be for him to post some of his shares as collateral for a loan. Such a move would not constitute a sale but would probably have to be disclosed in a regulatory filing.

If Trump decides to sell, he could opt for a private sale of stock to a wealthy investor. Such a move would allow him to cash out with an investor who might be willing to hold onto the shares for a period of time — especially if the shares were sold by Trump at a discount to the prevailing market price.

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This article originally appeared in The New York Times.

By Matthew Goldstein/Daniel Ribar
c. 2024 The New York Times Company