Trump and dump

As we have noted, Donald Trump is currently sitting on a billions of dollars of paper money because of his ownership of a shitty meme stock, which means he must be looking for a way to make this liquid:

Remember in Godfather II when the mobster Hyman Roth tells Michael Corleone, his co-investor in President Fulgencio Batista’s Cuba, “Michael, we’re bigger than U.S. Steel”? U.S. Steel is no longer the colossus it was in 1958, when that scene takes place. But it still caught my attention when The Wall Street Journal reported Tuesday that the valuation of Donald Trump’s Truth Social was almost as big as U.S. Steel’s. This was the very first day of trading for the app’s parent company, Trump Media & Technology Group (ticker symbol: DJT), when the stock price rose 56 percent to $78 per share; it closed Wednesday just south of $70. That’s a remarkably strong performance for a money-losing social media platform.

You may recall from Godfather II that the Mafia’s stake in Cuba is abruptly reduced on New Year’s Eve by Fidel Castro to zero. DJT is similarly unstable. Jay Ritter, a finance professor at the University of Florida, told CNN that if the company’s stock reflected its actual value it would be priced not at $70 but at $2. The large mismatch between stock price and stock value will sorely tempt the cash-poor Trump to sell off a significant portion of his shares, in a potential maneuver that I believe I am the first to label “Trump and dump.”

There are, of course, regulations preventing sales for six months without a board waiver precisely to stop such scenarios. But then you take a look at the company’s board:

Trump’s $4 billion stake in Truth Social constitutes more than half of all shares. He is barred for six months from selling any of that stake, unless he receives permission from the company’s board. Rather naïvely, I assumed this would be difficult, because so big a sell-off might look to regulators an awful lot like an illegal “pump and dump” scheme wherein some boiler-room sleazeball talks up the value of a stock to investors and then dumps his shares, making a killing while his clients lose their shirts. The Truth Social board would also likely worry that letting Trump smash the piggy bank would endanger the value of their own investment in the company and invite a lot of outraged shareholder lawsuits.

I figured all this, however, without considering the composition of Truth Social’s board, which turns out to consist of seven members, three of them former Trump administration officials (former U.S. Trade Representative Robert Lighthizer, former White House aide Kash Patel, and former Small Business Administration chief Linda McMahon). Former Representative Devin Nunes, whose reward for running interference during Trump’s first impeachment was to be named chief executive of Truth Social, makes four board members unlikely to contradict Trump, and a fifth is Don Jr., who wouldn’t know how. If Trump asked this board to jump off Trump Tower, it would race to the elevator and push “up.”

According to The Wall Street Journal’sAmrith Ramkumar, should Trump receive a waiver from his board, company rules will permit him to sell “several hundred million dollars worth of stock” over a three-month period. That will surely be sufficient to provoke a sell-off by the APTs (who by definition are in it only for the money) and to wipe out, in turn, the T.B.s, who bought shares because they believe in the once and future President Donald Trump. Maybe the T.B.s wouldn’t mind; maybe it’s even what they expect. Nine years after Trump burst onto the political scene, the most baffling truth about Trump is still best encapsulated by that great New Yorker cartoon from 2016 in which two lambs look up at a billboard showing the Big Bad Wolf, in suit and tie, saying, “I Am Going to Eat You.” In response, one lamb turns approvingly to the other and says, “He tells it like it is.”

Ka-ching! But Trump likes to treat his followers as an ATM and his followers like bering treated that way if Trump is doing it, so in a way cashing out early and crashing the stock would be what both sides are looking for.