Shares of Trump Media fell 8% on Tuesday as former President Donald Trump became eligible for an earnout bonus. The stock closed at $32.57 per share, significantly lower than its opening price last month of over $70. Trump will receive an additional 36 million shares, valued at approximately $1.15 billion, because the stock closed above a minimum share price of $17.50. The earnout was contingent on the stock reaching a benchmark for 20 trading days within a 30-trading-day period. Trump, who is the majority shareholder in DJT, already owns 78.75 million shares, bringing his stake in the company to a total value of around $3.7 billion with the earnout bonus.
A spokesperson for Trump Media did not respond to CNBC’s request for comment regarding the earnout. The company also released a statement on Tuesday outlining steps shareholders could take to prevent the lending of their stock for short selling. Last Friday, Trump Media wrote to the CEO of Nasdaq, warning of possible market manipulation due to “naked” short selling of shares. Short selling involves borrowing shares of a company and selling them, with the aim of buying them back at a lower price later to make a profit. “Naked” short selling occurs when the short seller does not actually borrow the shares before selling them, which can lead to downward pressure on the stock price.
Trump Media’s stock price has experienced significant fluctuations recently, with the share price dropping to $32.57 before Trump qualified for the earnout bonus, which increased the stock’s value. This increase in value has allowed Trump to earn an additional 36 million shares, boosting his stake in the company to a total of around $3.7 billion. Despite the fluctuations in the stock price, Trump Media remains focused on addressing potential market manipulation and protecting shareholders’ interests through measures to prevent short selling of their shares.
The earnout bonus received by Trump highlights the potential impact of a company’s share price performance on executive compensation. In this case, Trump’s bonus was contingent on the stock reaching a specific benchmark, incentivizing him to drive up the share price to unlock the additional shares. The earnout structure can align the interests of executives with those of shareholders by tying compensation to stock performance. However, it can also lead to criticism if executives prioritize short-term stock price gains over long-term value creation for the company.
The volatility in Trump Media’s stock price and concerns about market manipulation highlight the challenges faced by publicly traded companies in maintaining stable share prices and ensuring fair trading practices. By raising awareness of potential market manipulation and taking steps to prevent short selling, Trump Media is seeking to protect shareholders and maintain the integrity of its stock price. As the company continues to navigate these challenges, investors will be closely monitoring its performance and any further developments that may impact the stock price or executive compensation structure.
Overall, Trump Media’s recent stock performance, the earnout bonus received by former President Donald Trump, and the company’s efforts to address market manipulation underscore the complex dynamics at play in the stock market. As investors and executives grapple with these issues, the importance of transparency, integrity, and accountability in financial markets becomes increasingly evident. By taking proactive measures to protect shareholders and maintain confidence in its stock, Trump Media is working to navigate the uncertainties of the market and uphold its commitment to stakeholders.
