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Former US president Donald Trump’s shares in the parent company of his social media platform Truth Social have plunged in value in the weeks before he can sell them, a losing streak that has at least temporarily erased billions of dollars from his paper net worth.

Trump is the biggest shareholder of Trump Media and Technology Group. But he has been unable to sell his 114 million shares because of a standard lock-up agreement that began when Trump’s company first went public through a merger in March and does not end until later this month, securities filings show.

In those six months, Trump Media’s stock has plummeted almost 70% to about US$17 ($27.53) - an all-time low since the merger was approved. At that price, Trump’s roughly 60% stake in the company would be valued around US$2 billion ($3.2b), over US$4 billion less than when the company publicly debuted.

Trump has not said what he will do with the shares after the lock-up expires, and a sale even at the recent depressed prices would be enormously profitable. But the stock’s nosedive suggests the market has doubts over the company’s performance.

Trump Media lost more than US$16 million in the second quarter and earned less than US$1m in revenue, the company said last month. Some analysts expect the stock - which trades under Trump’s initials, DJT - could plunge further if Trump loses the presidential election in November.

“There’s no conceivable upside from the business aspect … This is a personality stock and a celebrity stock,” said John Rekenthaler, a vice-president for research at financial services firm Morningstar. “They’re trying to become a streaming media platform, but there’s not enough capital to fund it and they’re late - just like they were late on the social media game. It’s just not a well-designed business.”

Current Republican presidential candidate and former US president Donald Trump participates in a question-and-answer session at the National Association of Black Journalists (NABJ) convention at the Hilton Hotel on July 31, 2024 in Chicago, Illinois. Photo / Getty Images

A Trump campaign spokesman referred comment to Trump Media, whose spokeswoman Shannon Devine said in a statement the company “is rapidly building out our platform while maintaining a strong balance sheet”. She added the company had successfully launched a video streaming service on its “uncancellable, custom-built content delivery network” and had maintained a strong “financial position with US$344 million in cash and cash equivalents and zero debt”.

Both spokespersons did not respond to questions about whether Trump intends to sell his shares after the lock-up expires.

Newly public companies often implement lock-up agreements to show investors their top executives and financiers are committed and won’t race to cash out. But Trump’s lock-up has proven unusually costly, at least on paper, given the size of his stake and the extent of the drop. Trump Media’s market debut in March propelled Trump into the rankings of the world’s 500 richest people. By Tuesday, according to Forbes, he had slipped to number 851. (Trump has previously said the Forbes ranking underestimates his fortune.)

Trump’s lock-up period is expected to end around September 20, based on calculations established in financial filings and tied to the stock’s performance. Other executives and early investors in the company granted millions of dollars’ worth of salaries and stock will also be released from the lock-up and be allowed to sell some or all of their shares around the same time.

But a sell-off of shares among the company’s leadership could undermine the stock, driving new investors away. Trump Media has called Trump’s possible selling of shares one of many “risk factors” in securities filings and said the company would be “materially adversely affected” if he chose to divest his interest after the lock-up period ends.

“You don’t want to be left holding a bag of possibility that once was overflowing,” Rekenthaler said. “But if you rush the process, that pushes down the stock price. It also doesn’t look good to shareholders, or generally to your belief in the company and its prospects.”

Trump’s shares in the company represent one of his biggest economic assets and could provide a major infusion of cash as he and his campaign are facing financial strain. Trump has been ordered to pay at least US$454m in a civil fraud case in New York and US$83m in a defamation case brought by the writer E. Jean Carroll. Trump, who is appealing both judgements, listed both liabilities as still in excess of US$50m in a financial disclosure last month.

Trump received 78.7 million shares when the company went public in March and an additional 36 million shares through an “earnout” provision one month later tied to the stock’s performance, securities filings show. If he had been able to sell all the shares at market prices immediately upon receiving them, his proceeds would have totalled more than US$6 billion, a trading analysis shows.

Trump Media’s stock price has roughly paralleled Trump’s performance in presidential election polls. Both surged after the assassination attempt but have declined in the weeks since US President Joe Biden withdrew from the race and US Vice-President Kamala Harris began overtaking Trump in national polls. The company has warned in filings that its value could “diminish if [Trump’s popularity] were to suffer”.

Though Trump has continued to use Truth Social as his main online megaphone, he has in recent months also expanded his internet footprint to include other larger platforms that could erode a significant selling point: access to Trump.

His campaign now routinely posts videos of him on TikTok, where he has millions more followers. He has also resumed frequently posting to social media platform X (formerly Twitter), and last month sat for an exclusive interview there with its billionaire owner Elon Musk. Trump Media shares have lost about a third of their value since that interview.

Trump Media shares are currently selling at the same price that its merger partner, Digital World Acquisition, was trading for at the beginning of the year, when the merger deal was in doubt. When Digital World announced the merger deal in October 2021, some investors bought shares for as much as $175.

Trump Media has said its stock is owned by hundreds of thousands of retail shareholders, many of whom are amateur investors who support Trump and have seen its falling price as a test of faith.

Chad Nedohin, a long-time Trump Media supporter in Canada who posts video blogs about the company on the streaming site Rumble, wrote on Wednesday on Truth Social that the stock price was “a hoax to get people to sell”.