Recently, Trump Media & Technology Group, the parent company of Donald Trump’s social media network, made a significant announcement that caused shares to drop by 18.4% on Monday. The company has decided to allow insiders, including former President Trump himself, to sell their shares much earlier than previously agreed upon.
In a filing with the SEC, the company revealed plans to allow the potential sale of millions of restricted shares held by investors through warrants that can be converted into common stock. This move was put in place to protect newer investors from insiders selling off their stakes all at once; however, with this amendment, around 21.5 million shares will be sold by insiders, potentially diluting existing shareholders by over 15%.
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 Trump’s social media network, Truth Social. Lockup periods and warrant restrictions are put in place to protect investors from dilution due to insider sales; however, with this amendment, some investors may have chosen to sell their shares in response to the news.