Truth Social, the driver of Trump Media (Photo by Anna Barclay/Getty Images)
Donald Trump news is plentiful, but Trump Media is silent. The worst part of the silence concerns the 2nd quarter earnings report.
Facing the company is a huge amount of currently “locked-up” shares becoming salable all at once on September 25. Therefore, management should be trying hard to explain the value of Trump Media and providing a vision of its future. Additionally, because the 1st quarter earnings report was weak, getting the 2nd quarter report out is especially important.
Trump Media as a publicly traded company
And yet Trump Media still has not set a date for its earnings report release. Time is running out to set up an earnings call for the benefit of shareholders, analysts, potential investors, and the media. Not doing so at this critical point would be a repeat of first quarter’s silent earnings report drop that left the media free to cherry pick negative numbers.
The September selloff could be large
No matter how you slice the data, Trump Media stock is extremely overvalued. It sells at over 7,000 times sales, and management’s touted cash holdings work out to a miniscule $1.44 per share.
The inability for shareholders to sell many shares has provided a misleading view of the stock’s strength. Just as happens when a hot IPO’s restricted shares become unrestricted, selling can come in waves, driving the price sharply down. There is good reason that the end of lock-ups will cause a hit on Trump Media’s stock price. Therefore, management needs to provide a positive, understandable reason for holding and buying.
Note: There are two reasons to see the selling start before that date.
First, the lock-up removal can occur a few days early if the stock closes above $12 for twenty trading days beginning August 22. If it did so from the beginning, the lock-up would expire on Friday, September 20. Monday and Tuesday, September 23 and 24, are available if there is one or two days of too-low closes. Otherwise, Wednesday, September 25 is the day.
The calendar of trading days leading up to the end of lock-ups
Second, investors and Wall Street could begin short selling.
The bottom line: Hearing from management is a key analytical step
Companies do it because they know that even a showy annual report with desirable numbers is not enough. Everyone wants to hear what management knows, thinks, and foresees.
Trump Media is fortunate to have a fanbase. However, because management is using stock in place of currency, there has been an expansion to other shareholders. They remain because they cannot sell. Soon, they will be able to do so and collect their payment, unless they believe Trump Media will grow and its stock will rise.
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