On Monday, the stock price of Trump Media & Technology Group dropped by 18.4%, following the announcement that insiders would be allowed to sell their shares earlier than previously agreed upon. This decision was made by the parent company of Donald Trump’s social media network, allowing millions of restricted shares to be sold through warrants that can be converted into common stock.
In a filing with the SEC, Trump Media revealed its plans to allow potential sales of these shares, including those held by former President Trump. Although his ownership stake remains subject to a lockup period of approximately five months, this amendment will allow around 21.5 million shares to be sold by insiders. This has the potential to dilute existing shareholders by over 15%.
Trump Media & Technology Group recently became a publicly traded company through a SPAC merger with Digital World Acquisition Corp. on March 25. The company’s primary asset is Truth Social, which is owned by former President Trump. Lockup periods and warrant restrictions are put in place to protect newer investors from insiders selling off their stakes all at once; however, with this amendment, some investors may have decided to sell their shares in anticipation of significant dilution.