[The Epoch Times, April 23, 2024](Comprehensive report by Epoch Times reporter Qiusheng) Donald Trump (Trump) will use the “Truth Social” app from his social media app on Tuesday (April 23) )’s operating company received stock awards worth $1.3 billion, equivalent to about half of the majority stake he already holds in the company.
Trump’s wealth surges
The bonus will bring the former US president’s total stake in Trump Media & Technology Group (TMTG) to $4.1 billion.
Although Trump has agreed not to sell any of his TMTG shares until September, the windfall has greatly increased his wealth, which Forbes estimates at $4.7 billion.
Unlike much of his real estate empire, the shares are easily liquidated on the stock market and could come at a time when Trump’s legal bills and fines, including a $454.2 million judgment in a New York civil fraud case he is appealing, are piling up. use.
Public support is unprecedented
Strong support from Trump supporters led to a wild rise in the company’s stock price. The company listed on Nasdaq last month after merging with a Special Purpose Acquisition Company (SPAC) and was snapped up by Trump supporters and speculators, and its stock price has been on a roller coaster ride ever since. .
Under the terms of the SPAC deal, Trump is entitled to a stock dividend once TMTG’s share price remains above $17.50 within 20 trading days after listing on March 26. The stock price closed at $35.50 on Monday. If the stock price falls by more than half on Tuesday, Trump will not receive the dividend.
TMTG’s current valuation of about $5 billion is equivalent to about 1,220 times the loss-making company’s 2023 revenue of $4.1 million.
No other U.S. company with a similar market capitalization has such a high valuation multiple, according to London Stock Exchange Group (LSEG) data. Although TMTG warned investors in regulatory filings, its operating losses cast “substantial doubt” about its ability to continue as a going concern.
A TMTG spokesperson declined to comment on the award of stock to Trump, but said, “Trump Media has more than $200 million in the bank and no debt, is meeting all obligations related to the merger and is rapidly advancing its business plan. “
While Trump’s windfall is a huge sum for a small, loss-making company like TMTG, the earnings structure that allows for this is commonplace. More than half of SPAC mergers completed in 2022 will see management stock gains, according to a report from law firm Freshfields Bruckhaus Deringer.
However, as Freshfields securities attorney Michael Levitt said, because many SPAC deals end up underperforming on the stock market, few executives receive these earnings bonuses. TMTG’s situation is rare because its stock trades decoupled from its business prospects.
Levitt said, “Many of the gains in SPACs never materialized because the prices of many SPACs fell significantly after the mergers were completed.”
To be sure, TMTG makes it easier for Trump to reach the earnings threshold. In October 2021, when TMTG agreed to merge with SPAC, according to the transaction scenario, TMTG’s share price had to exceed $30 for Trump to receive the full income bonus. Regulatory documents show that the two parties revised the agreement in August 2023, lowering the threshold to $17.50.
If this were not the case, Trump would not receive the full bonus because TMTG’s stock price was below $30 last week. However, under the terms of the deal, Trump can receive full proceeds for three years after the company goes public, so if the stock price is above the threshold for 20 days during any 30 days during that period, he can still receive full proceeds.
(This article refers to reports from Reuters)
Editor in charge: Ren Zijun#
Tags: Peoples strong support Trump expected receive US1 .3 billion stock awards Truth Social Media TMTG SPAC
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