Trump Media recently filed the SEC Form S-1 to register all the shares of the newly merged company for sale, potentially leading to a large selloff. The number of outstanding shares of Common Stock with the exercise of all Warrants and the issuance of Earnout Shares and Alternative Financing Shares is 204,441,834. This includes shares held in escrow pending disputes, Earnout Shares, Alternative Financing Shares, and shares offered by the company itself.
The Selling Securityholders will have the discretion to determine when and how they dispose of the shares of Common Stock registered for resale under the prospectus. While there is typically a 6-month waiting period for selling shares, Donald Trump may be able to request a release from this requirement for his majority holding of 114,750,000 shares. This could potentially contribute to a larger number of sellers compared to buyers in the market.
It is important to not rely on past stock market trends to predict future behavior, especially based on short-term price increases. Shareholders who have acquired shares at lower prices may be inclined to sell to realize profits and move on. There is also the psychological trend reversal effect, where a decrease in stock price after a significant increase could lead to panic selling, particularly if the stock price does not hold above a certain level.
The advice given is to not wait when faced with uncertain market conditions. Successful investing often involves taking precautionary measures when the floodgates open, rather than waiting to see the full extent of potential risks. Many successful investors have acknowledged the importance of selling too soon rather than holding onto assets in anticipation of improvement. By selling early, investors can protect their capital and potentially find better opportunities elsewhere.
In summary, the registration of all shares for sale by Trump Media could lead to a significant selloff in the market. With various factors such as disputed shares, potential releases from the waiting period, and psychological trends affecting investor behavior, it is advised to be proactive in dealing with market uncertainties. By being prepared to sell assets when necessary, investors can mitigate risks and potentially find more profitable opportunities elsewhere. It is important not to rely on past trends or short-term price increases to predict future market behavior, as circumstances can change rapidly in the stock market.