Brace for Volatility: Over 8 Million Shares of Trump Media and Technology Group (DJT) Become Sellable Today

Please note that this is not intended as investment advice. The author does not have any positions in the stocks mentioned.

Trump Media and Technology Group Corp. (NASDAQ: DJT), the parent company of Donald Trump’s Truth Social platform, completed its merger with the SPAC Digital World Acquisition Corp. (DWAC) and became a publicly traded company on the Nasdaq exchange. However, the company’s initial optimistic outlook may face challenges due to multiple rounds of dilution, with the first round anticipated to occur as early as today.

Before moving on, it should be noted that the recent merger has resulted in approximately $293 million in proceeds being made available from Digital World’s IPO. This influx of liquidity is expected to relieve the significant cash constraints that have been plaguing Trump Media and Technology Group and its Truth Social platform for some time now. As of September 2023, Truth Social had a meager amount of $1.8 million in cash compared to a total of $60.5 million in liabilities.

This leads us to the heart of the issue. Presently, it is anticipated that the combined company will have a share float of approximately 135 million shares. Although most of these shares are currently restricted by lock-up periods of different lengths, there are currently two categories of shares that are unrestricted and can be sold freely:

1. The current public common shares of Digital World.
2. The convertible notes of Trump Media and Technology Group are currently associated with approximately 8.37 million shares.

The shareholders in this group are currently experiencing significant profits. As a result, it is highly probable that they will begin to sell off a portion of their shares as early as today and in the coming days and weeks, causing significant fluctuations in the market.

In the near future, the warrants of the merged company will reach the end of their lock-up period, causing a potential increase in volatility. Nevertheless, the insider shares of Trump Media and Technology Group will continue to be subject to lock-up restrictions for at least the next 6 months.

Following the merger between Trump Media and Technology Group and the SPAC Digital World, the former US President’s ownership now stands at 78.75 million shares, with a current value of over $3.5 billion. This makes him one of the largest beneficiaries of the combined company. However, it should be noted that Trump’s shares are still subject to a six-month lock-up period.