Trump Media & Technology Group (DJT) is now publicly traded, and that is the first risk. There is no support, fundamental or technical, for the stock price, Forbes noted.
According to Forbes, there are three problems with Trump Media’s earnout plan.
- First, the plan’s three “earnout” hurdles are the stock price holding up for 20 of 30 days above $12.50, $15.00, and $17.50. (If the stock clears $17.50, all three bonuses are earned simultaneously)
- Second, the “bonus” is new shares for all shareholders (i.e., printed paper that causes a corresponding decrease in per share sales, earnings, and stock price – in other words $0 value)
- Third, Donald Trump has an identical bonus plan, only with more shares than all the other shareholders, together.
Donald Trump owns a majority of the stock, which presents other issues for investors in Trump Media. From an SEC filing:
“Because TMTG [Trump Media & Technology Group] securityholders are expected to control a majority of the voting power of the outstanding New Digital World [now Trump Media…] common stock, with President Trump beneficially owning at least 58.1% of the voting power of such New Digital World common stock, New Digital World will then be a ‘controlled company’ within the meaning of applicable rules of the Nasdaq Global Market (‘Nasdaq’) upon the Closing. Under these rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a ‘controlled company’ and may elect not to comply with certain corporate governance requirements. TMTG intends to rely on these exemptions upon consummation of the Business Combination. As a result, New Digital World’s [Trump Media’s] stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.” Read more.
