Topline
The social media fortune of former President Donald Trump is expected to swell as the conditions of the Truth Social merger grant him millions of more shares in the public company, making him richer even as shares sank Tuesday, though the downright puzzling valuation of the firm likely puts in doubt how much of his stake he’ll ever be able to cash in on.
Key Facts
After closing Tuesday well above the $17.50-per-share condition laid out last week as part of Trump Media’s reverse merger, the company will likely award its namesake another 36 million shares as part of the earnout bonus outlined in a regulatory filing last Monday.
That new tranche was worth $1.2 billion as of Tuesday’s closing share price of $32.56, growing Trump’s holdings in the company from 78.8 million shares to 114.8 million shares, if and when he receives the stock.
That would swell his social media stake from $2.5 billion to $3.7 billion, provided the will add $1.2 billion to his net worth, at Tuesday’s stock price, once he receives the stock.
Trump’s growing social media endowment comes even after Trump Media stock fell about 8% on Tuesday, sitting about 60% below its March peak, valuing the company at a still robust $4.5 billion market capitalization.
Trump’s existing holdings lost about $230 million in value Tuesday, meaning he netted out about a $900 million gain in his total Trump Media shares on paper Tuesday.
Forbes Valuation
Trump’s net worth was $4.4 billion at the end of Tuesday trading, according to our calculations based on Trump’s 79 million existing Truth Social shares, as well as his real estate and other assets. Trump’s fortune would climb to about $5.5 billion if the award is indeed granted Tuesday, provided his social media stock’s share price stays relatively steady, which is far from a certainty.
Contra
As is the case with Trump Media, significant questions linger about the true value of Trump’s earnout award even after meeting its pre-conditions Tuesday. For one, you can’t just create equity out of thin air—shareholders are still divvying up the same pie of the Truth Social parent. So, the value of Trump’s bonus is dependent on the notion that the company’s near $5 billion valuation would support a 40 million jump in the shares outstanding, or about 30% of new issues, and would not be negatively impacted by the dilution. The stock’s 18% loss last Monday after Trump Media announced the possible offering indicates the damage may already be done, but its overall valuation is divorced from its fundamentals, which imply it’s worth somewhere around 1% of its present market capitalization. Questions also linger about when Trump could sell, or how much he could get rid of, his shares in Trump Media due to his status as the company’s majority shareholder, which carries significant regulation for any stock sales.
Further Reading