What's New
President-elect Donald Trump transferred $4 billion in stake that he owns in Trump Media & Technology (TMTG), Truth Social's parent company, to a revocable trust, causing the stock to drop Friday morning.
Newsweek has reached out to Trump for comment via email.
Why It Matters
The incoming president's stake in the company is valued at more than $4 billion, with Trump previously making his commitment to the company and its shares clear.
He said in November that he would not be selling shares in the company, which has a market capitalization of around $7.7 billion.
What To Know
Trump moved 114.75 million shares, which makes up 53 percent of TMTG, to a revocable trust where he is the sole beneficiary, a Securities and Exchange Commission (SEC) filing on Thursday revealed.
For that fund, Trump's eldest son, Donald Trump Jr. is the sole trustee. That means he has sole voting and investment power over the securities owned by the trust.
At $34.68 per share Friday afternoon, the stock fell down 2 percent today after news of Trump's stock transfer was revealed.
Despite the reaction to Trump's investment move, experts say this could ultimately stabilize the stock for investors. This is because the revocable trust will prevent a mass sell-off of the stock while Trump is in office.
Trump's actions, meanwhile, have historically been linked to the stock's performance.
After a debate in June in this year's presidential race that was perceived by many viewers as a Trump victory over President Joe Biden, TMTG shares soared 13 percent in the June 28 premarket trading alone.
What People Are Saying
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek:
"Shares of DJT have been one of the most fascinating business stories of the last year. It's been an epic back-and-forth in buying and selling, largely centered around Trump's election chances. Not selling his shares and instead putting them in a revocable trust ensures a mass sell-off caused by him unloading his shares won't occur but also limits his ability to do anything with them while in the White House. It's the best scenario for investors and the only scenario for the incoming President."
Kevin Thompson, a finance expert and the founder of 9i Capital Group, told Newsweek:
"This is a common estate planning move that helps avoid the probate process and ensures a successor trustee can manage the assets in case of incapacity. While trusts do provide some privacy benefits, in this case, privacy isn't 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 holdings, so privacy is not the reason for the move."
What Happens Next
Moving forward, Thompson said Trump likely made the move for continuity purposes.
"If something were to happen to him, the trust allows for the seamless transfer or dissolution of shares 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 head into 2025."
Since Truth Social, Trump's social media platform, has historically been viewed as "meme stock," driven by the president-elect's popularity rather than business ideals, the stock will continue to hinge on Trump's influence rather than the media company's actual business performance, Thompson said.
"At its core, this is yet another example of Trump's business acumen," he added. "Whether selling bibles, shoes, or colognes, Trump has consistently demonstrated his ability to monetize his brand. Moving his Truth Social stock into a trust is just another step in leveraging that influence strategically and financially."
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