Trump media climbs 16% to $7.9 billion post-SPAC deal valuation

The potential funds come at a critical time for Trump. He’s paying millions of dollars a month to fund his ongoing legal troubles. Trump is set for the first of his criminal trials on April 15, a judge ruled.

Separately, Trump was ordered by a different judge last month to pay $454 million after a civil ruling that he had fraudulently inflated his wealth for years. While a New York appeals court agreed on Monday to slash the amount the former president would have to put up as a bond while he contests the verdict, he is still required to post $175 million within 10 days.

As the Trump Media deal became a political lightning rod, retail investors embraced the company and its stated mission fighting against big tech companies like Meta Platforms Inc., Netflix Inc., and Elon Musk’s X, even as the merger’s winding multi-year path to completion triggered a wave of skepticism from most of Wall Street.

The SPAC soared 185% this year through Monday’s close in anticipation of the merger, mirroring Trump’s electoral fortunes as he bulldozed his way toward the Republican presidential nomination.

But Trump and other Trump Media insiders with stakes can’t sell any shares for roughly six months, unless management moves to expedite the process.

The seven-person Trump Media board of directors, the group that would potentially give the green light to the former president to sell shares before September, is made up of a range of ex-members of his administration. Among them are former U.S. Trade Representative Robert Lighthizer, former head of the Small Business Administration Linda McMahon and former Trump defense official Kash Patel.

Devin Nunes, a former California Representative who left Congress to become CEO of Trump Media, Trump’s son Donald Trump Jr. and Digital World’s CEO Eric Swider are among the other board members. The company trades under the symbol DJT.

Meme stock

In the lead-up to the deal’s completion, Trump Media had warned it could go bankrupt without the SPAC merger. Having avoided that fate, the next challenge will be avoiding the fate doled out to many so-called meme stocks — a name coined during the height of the pandemic for companies whose trading appears detached from reality.

If Trump and other insiders sell share before the six-month lock-up period that could trigger a selloff as the market would likely be inundated by sellers.

“A problem for meme stocks is that the supply of shares that are tradeable, known as the public float, rather than the fundamental value of a share, is an important determinant of the price,” said Jay Ritter, a finance professor at the University of Florida. With the shares available for trading potentially accounting for just a small percentage of the total outstanding, a sale by Trump or other insiders after the lock-up ends could spark a rapid decline.

“In the short run, anything can happen,” said Ritter. “But buying an overvalued stock hoping to sell it at any even higher price is known as the greater fool theory of investing.”