How Donald Trump Transfers $4 Billion in Social Truth Actions and Impacts Investors

What's new

President-elect Donald Trump transferred $4 billion in stakes he owns in Trump Media & Technology (TMTG), the parent company of Truth Social, to a revocable trust, sending shares tumbling Friday morning.

Newsweek has contacted Trump for comment via email.

Why it matters

The new president's stake in the company is valued at more than $4 billion, with Trump having already made his commitment to the company and its actions clear.

He said in November that he would not sell shares of the company, which has a market capitalization of about $7.7 billion.

What you need to know

Trump transferred 114.75 million shares, or 53% of TMTG, to a revocable trust of which he is the sole beneficiary, a Securities and Exchange Commission (SEC) filing revealed Thursday.

For this fund, Trump's eldest son, Donald Trump Jr. is the sole administrator. This means that it has exclusive voting and investment power over the securities held by the trust.

At $34.68 per share as of Friday afternoon, the stock fell 2% today after news of Trump's stock transfer broke.

Despite the backlash to Trump's investment decision, experts say it could ultimately stabilize the stock for investors. In effect, the revocable trust will prevent a stock sell-off while Trump is in office.

Trump's actions, meanwhile, have always been tied to the stock's performance.

After a June debate during this year's presidential race that was seen by many viewers as a Trump victory over President Joe Biden, TMTG shares soared 13% in the past year alone. pre-opening of the market on June 28.

President-elect Donald Trump speaks December 16 in Palm Beach, Florida. Trump transferred $4 billion in stakes he owns in Trump Media & Technology (TMTG), Truth Social's parent company, to a revocable trust, causing… President-elect Donald Trump speaks Dec. 16 at Palm Beach, Florida. Trump transferred $4 billion in stakes he owns in Trump Media & Technology (TMTG), Truth Social's parent company, to a revocable trust, causing shares to plummet Friday morning. More from Andrew Harnik/Getty Images What people are saying

Alex Beene, a professor of financial literacy at the University of Tennessee at Martin, told Newsweek:

“DJT stock has been one of the most fascinating trading stories of the last year. It's been an epic back-and-forth of buying and selling, largely focused on the election chances of Trump not selling his shares and instead placing them in a revocable bank ensures that a selloff caused by unloading his shares will not occur, but also limits his ability to do anything with them while. he's at the White House. This is the best scenario for investors and the only scenario for the new president.

Kevin Thompson, financial expert and founder of 9i Capital Group, told Newsweek:

“It is a common estate planning approach that avoids the probate process and ensures that a successor trustee can manage the assets in the event of incapacity. Although trusts offer some advantages in confidentiality, in this case, confidentiality is not a major advantage given Trump's status as a large shareholder. Under Section 13(d) of the Securities Exchange Act, large shareholders are required. to publicly disclose their assets, confidentiality is therefore not the reason for this decision.

What happens next

Moving forward, Thompson said Trump likely made the decision for the sake of continuity.

“If anything happened to it, the trust would allow the shares to be transferred or dissolved seamlessly without delays or complications,” he said. “However, the move raises questions for investors about whether it reflects a strategic decision or a signal regarding the stock's future as we approach 2025.”

Since Truth Social, Trump's social media platform, has historically been considered a “meme action,” driven by the president-elect's popularity rather than his business ideals, the action will continue to depend on the influence of Trump rather than the actual business performance of the media company, Thompson. said.

“Basically, this is yet another example of Trump’s business acumen,” he added. “Whether it's selling Bibles, shoes, or colognes, Trump has consistently demonstrated the ability to monetize his brand. Moving his Truth Social shares into a trust is just another step to leverage of this influence strategically and financially.”

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