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Trading in Trump Media & Technology Group, which operates Truth
Social, has been volatile since its listing on March 26,
attracting both loyal Trump fans and short sellers who see the
stock as wildly overvalued.
The stock already has fallen nearly 60% since it opened on its
first day of trade at $70.90, after a blank-check merger with
Digital World Acquisition Corp. The shares closed down 18.4% at
$26.61.
Monday's filing, known as a registration statement, is
considered standard after a company goes public through a
special purpose acquisition company, or SPAC. These "blank
check" entities raise capital through an initial public offering
to acquire or merge with a company that is not publicly traded.
In the vast majority of these mergers, the company is
contractually required to file a resale statement for parties
who may not be able to sell their shares freely without the
registration, said Peter Byrne, a securities lawyer at Cooley
LLP who specializes in the process of going public.
"It's completely standard," Byrne said.
Bankers and lawyers told Reuters while the filing does not
indicate any imminent intention to sell from affiliates of the
company, it does clear the way for Trump to sell his shares
after the lock-up is expired or waived.
The filing showed a potential sale of 146.1 million shares,
including Trump's stake of 114.8 million shares, divided between
the 78.75 million he owns and an additional stake he could
receive if certain performance-based measures are achieved.
The filing also listed an additional 21.5 million shares that
could be sold upon the exercise of certain warrants issued when
the company went public.
Trump, the Republican candidate for president in the November
election, is on trial in a Manhattan court related to hush money
payments to a porn star. He has pleaded not guilty.
(Reporting by Herbert Lash and Echo Wang in New York, Yuvraj
Malik in Bengaluru, additional reporting by Yuvraj Malik in
Bengaluru; Editing by Anil D'Silva, Sharon Singleton, Jonathan
Oatis and Richard Chang)
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