Insiders from the parent company of Donald Trump’s social media network, Trump Media & Technology Group, have been given permission to sell their shares earlier than previously agreed upon. This decision caused the company’s shares to drop by 18.4% on Monday.
In a filing with the SEC, Trump Media announced that it will be allowing the potential sale of millions of restricted shares held by investors through warrants that can be converted into common stock. The company also stated that insiders, including former President Trump, would be able to sell their shares earlier than expected. Despite this, Trump’s ownership stake in the company is still subject to a lockup period of about five months.
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 Trump’s social media network.
The amendment to lockup periods and warrant restrictions is meant to protect newer investors from insiders selling off their stakes all at once. However, with this change, around 21.5 million shares will be sold by insiders potentially diluting existing shareholders by over 15%.
The drop in the company’s shares reflects anticipation of new shares flooding the market and the possibility of significant dilution. Some investors may have decided to sell their shares in response to this news.
