Delaware Judge Rules Trump Media Breached ARC Global Agreement

A Delaware judge has determined that Trump Media & Technology Group Corp (TMTG) violated an agreement with Patrick Orlando's ARC Global investment vehicle. The ruling, issued on September 17, 2024, requires TMTG to allocate a larger portion of company stock to the group.

Vice Chancellor Lori Will presided over a one-day trial, concluding that the special purpose acquisition company (SPAC) that merged with TMTG had breached its contract with ARC. The dispute centered on the conversion ratio of Class B shares to Class A shares following the merger's completion.

ARC sought a conversion ratio of 1.8178 for each Class B share, while TMTG argued for 1.3481. Judge Will settled on a middle ground of 1.4911. She noted, "What should have been a straightforward exercise in contract interpretation and math was obscured by the parties' injection of other issues."

This ruling is part of a series of legal challenges facing TMTG. In July 2024, the Securities and Exchange Commission (SEC) filed a lawsuit against Orlando for securities fraud, alleging he failed to disclose DWAC's intention to merge with TMTG during its initial public offering.

TMTG, which operates the Truth Social platform, has also been embroiled in litigation with two co-founders of the social media site, Andy Litinsky and Wesley Moss.

"I do not want to sell my stock."

Donald Trump, the former president and current Republican presidential candidate, owns approximately 57% of TMTG stock. Despite his recent statement against selling his shares, TMTG's stock price has declined over the past two months, dropping from over $40 per share to $16.54 as of September 17, 2024.

The company's financial performance has been underwhelming, with revenues comparable to just two Starbucks coffee shops. In its most recent quarter ending June 30, 2024, TMTG reported a loss of $869,900.

As the lock-up period for stock sales by ARC and Trump is set to expire on September 19, 2024, market analysts remain skeptical about TMTG's valuation, suggesting it is disconnected from the company's actual business operations.

The ongoing legal disputes, coupled with TMTG's financial struggles, continue to cast a shadow over the company's future prospects in the competitive social media landscape.