With another $1.3 billion Truth Social
Windfall, Trump’s Stake Now Rises to $4.1 billion.
Donald Trump, the former president, is
about to amass yet another $1.3 billion in wealth from his social media empire,
but his company’s valuation is still utterly perplexing, raising questions
about how much of his investment he will ever be able to profit from.
The company will give its namesake an
additional 36 million shares if shares of Trump Media close Tuesday trading at
more than $17.50 a share, which will occur unless the price declines by more
than 50%. This is a portion of the earnout incentive that was detailed in a
regulatory filing last Monday.
As of Monday’s closing, share price of $35.50, the new tranche was valued at
$1.28 billion, increasing Trump’s ownership in the corporation from 78.8
million shares to 114.8 million shares. His social media investment would increase to $4.1 billion
from $2.8 billion as a result. Trump Media’s stock dropped by roughly 2% on Monday,
placing the company at a still strong $4.9 billion market capitalization, 55%
below its peak in March.
Trump’s net worth was $4.7 billion at the end
of Monday, according to our calculations based on Trump’s 79 million existing
Truth Social shares at their $35.50 share price, as well as his real estate and
other assets. Should his fortune rise by the $1.3 billion it’s slated to rise
Tuesday afternoon —which is no certainty given Trump Media stock’s volatility
in its four-week history—his fortune would rise to $6 billion, placing him on
the cusp of Forbes’ rankings of the 500 richest people in the world.
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As is the case with Trump Media, significant
questions linger about the true value of Trump’s earnout award likely to come
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.
