Investors React as Truth Social Co-Founders Cash Out Stocks
Recent Developments at Truth Social
Two co-founders of Donald Trump’s Truth Social platform have sold a significant portion of their stock amid ongoing disputes with the former president. This development has sparked considerable interest and speculation in the market.
According to a recent disclosure by Trump Media and Technology Group (TMTG), an investment vehicle controlled by Andrew Litinsky and Wesley Moss sold the majority of its nearly 7.53 million shares. These shares were estimated to be worth around $100 million based on the last closing stock price.
Overview of the Share Sale
The filing indicated that United Atlantic Ventures LLC, the investment vehicle in question, now holds only 100 shares. Litinsky and Moss do not currently hold any official roles within the company, serving instead as passive investors. This means their actions are not viewed as insider trading, but rather a normal market activity.
Litinsky and Moss initially connected with Trump as contestants on the reality show The Apprentice, which aired two decades ago. Following Trump's ban from major social media sites, they urged him to establish his own platform, ultimately granting him a majority stake in the company.
Changes in Ownership Stake
After TMTG went public, UAV held about 5.5% of the shares of the newly listed company. However, their relationship with Trump quickly soured, leading them to file a lawsuit against the company due to concerns over being undervalued. TMTG responded by counter-suing, alleging mishandling of the platform's rollout by the co-founders.
By mid-August, UAV's stake had fallen to less than 3.8% due to further dilution from stock issues. This is significant as it demonstrates the turbulent nature of their investment in the company and the surrounding concerns about its stability.
Market Implications of the Sale
The exact timing of the share sale by UAV was not disclosed, but regulations allow for some flexibility under such circumstances. Generally, passive shareholders with substantial stakes are required to report their transactions within five business days.
UAV was under a lockup period preventing any sales prior to mid-September, which may have allowed them to capitalize on potential price ranges of $12 to $15 per share. Typically, when major stakeholders liquidate positions, it can be viewed negatively by the market. However, it was largely anticipated given the existing disagreements between the parties involved.
Coping with Investor Concerns
With Litinsky and Moss unloading their shares, a level of uncertainty surrounding TMTG may have diminished since their shares have now fully entered the market. However, concerns persist regarding the potential actions of Trump, who retains nearly 115 million shares, representing approximately 57% of the company.
Despite Trump's assertions that he does not intend to sell his shares, the stock price recently plummeted to an all-time low amid fears that he might need to liquidate some assets due to rising legal expenses. Meanwhile, Trump has been launching a variety of products under his brand, including diamond-encrusted wristwatches priced at $100,000 each.
TMTG has not provided comments related to these recent developments, leaving investors pondering the company's trajectory and market positioning.
Frequently Asked Questions
Why did the co-founders of Truth Social sell their stocks?
The co-founders sold their stocks amid ongoing disputes with Donald Trump, the former president, which prompted investors to reassess the company's market stability.
How much were the shares sold for?
The shares sold were valued at roughly $100 million based on the stock's closing price at the time of sale.
What is the current status of Truth Social?
Truth Social is facing internal conflicts, with its co-founders involved in legal disputes while also trying to maintain investor confidence.
Will Trump sell his shares in the future?
While Trump has claimed he has no intention of selling, concerns persist over his mounting legal costs which could pressure him to liquidate some of his shares.
How did investors respond to the share sale?
Investors have reacted with concern, factoring in the co-founders' sale and the ongoing uncertainty surrounding Trump's position and the company's viability.
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