A rocky start for Trump Media & Technology Group Corp. shares has wiped out $4.5 billion in market value in just a couple of weeks. But it will have to lose a lot more than that to put at risk the massive special bonus due to the former president and his corporate insiders.

As part of the startup’s blank-check deal, Trump Media insiders — Donald Trump himself is by far the largest holder — will divvy up 40 million new shares if the stock trades can stall their latest slide, regulatory filings show. The so-called earnouts, which can be a standard part of deals involving special purpose acquisition companies, or SPACs, are designed to reward the original investors, but they also punish ordinary shareholders by diluting the value of their stakes through the issuance of millions of extra shares.

In the case of Trump Media, the stock needs to trade above $17.50 for 20 days out of a 30-day period — Friday marked its 13th session — over the next three years. With the company closing Friday at $32.59, those conditions could be met as soon as April 23, despite the stock’s 59% tumble from a high of $79.38 on March 26. In fact, the shares would need to plunge another 46% for the now $1.3 billion paper payday for the former president and his co-founders to be in doubt.

That said, Trump Media is not a normal business or stock, so there are few sure things when it comes to its behavior in the market.

A representative for Trump Media didn’t respond to requests for comment.

Value spirals

“So much about the stock price movements of this company are driven by nonrational factors that it’s hard to make particularly firm predictions,” said Michael Ohlrogge, a New York University law professor who studies SPACs.

Of course, the value of the additional windfall has spiraled with shares tumbling. The earnout has shed some $1.3 billion in value from a debut peak through Friday’s close, with Trump’s current stake losing billions on paper in a matter of weeks.

The insiders are somewhat protected even if the shares keep falling and drop below $17.50, because the payout slides, but doesn’t disappear, as the stock hits certain levels. So, as long as Trump Media trades above $15, the group will get 30 million shares to split. And if the shares fall toward $12.50 the payout drops to 15 million shares.

But the reality is trying to figure out what these stakes are worth is an ever-changing exercise because of the stock’s swings, and in practical terms moot since the former president and the other insiders must wait until September before even trying to sell some of their holdings because of the SPAC deal’s six-month lockup period. So while the millions of shares would deliver Trump some $1 billion in additional stock, turning that paper profit into real cash is going to take some time.

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