Donald Trump to get $3 billion richer? But that likely won’t solve his cash crunch

[Social Media]

 

Former President Donald Trump is on the brink of a substantial financial windfall as his media venture, Trump Media & Technology Group, prepares to go public, potentially valuing his stake at over $3 billion. However, despite the apparent wealth on paper, experts caution that this windfall may not resolve Trump's immediate financial challenges.

 

The looming windfall comes at a critical time for Trump, who is facing significant legal and financial pressures. Trump Media, the owner of Truth Social, is set to merge with a blank-check company, Digital World Acquisition Corp, pending shareholder approval. Trump, as the dominant shareholder, stands to benefit immensely from the merger, with a stake of at least 58.1% and potentially worth billions.

 

While this may seem like a solution to Trump's financial woes, several factors complicate the situation. The liquidity of Trump's shares in the company is questionable, with the market potentially overvaluing Trump Media based on its fundamentals. Truth Social's performance has been underwhelming, with a declining user base and minimal revenue compared to its valuation.

 

Moreover, Trump's shares are subject to lock-up agreements, preventing immediate sale or pledging as collateral. Even if Trump were able to sell or pledge his shares, finding buyers or lenders willing to accept them could prove challenging, especially given the uncertainty surrounding the company's future performance.

 

Additionally, any attempt to amend the lock-up agreements or use the shares as collateral would require disclosure and may further undermine confidence in the stock. Banks may be hesitant to accept Trump's shares as collateral due to the associated risks, potentially leading to further complications.

 

In summary, while Trump's stake in Trump Media may appear lucrative on paper, converting it into cash to address his financial challenges is likely to be far more complex and uncertain than it seems.

 

23.03.24

Source

 

[stevenl]

The lockup can be set aside by the company.