Trump Media & Technology Group is in the news today after reporting a $409.7 million Q3 profit, reversing a $238.1 million loss in Q2. Gains on digital assets and equity securities drove the turnaround.
At the time of writing, DJT traded at $4.10, with its shares closing at $4.06 on 9th November, up 1.75% before the earnings release.
What drove Trump Media’s Q3 profit?
Trump Media recorded $496.1 million in combined gains on digital assets and equity securities. The largest contribution was a $200.8 million unrealized gain on Bitcoin [BTC] pledged for its Options strategy. By quarter-end, the company had pledged 11,385.20 BTC for that strategy.
Another $107.5 million came from unrealized gains on Bitcoin and Cronos [CRO] holdings.
Equity securities added about $118 million in realized and unrealized gains.
After derivatives losses and other investment items, it reported $60 million in net investment income. CFO Phillip Juhan linked that investment income to a rise in BlackRock’s iShares Bitcoin Trust ETF (IBIT).
This reflects the 42% increase in IBIT’s closing share price to roughly $47 on September 30th, from roughly $33 on June 30th.
Trump Media also used proceeds from a partial sale of its IBIT holdings to buy 4,359 BTC during the quarter.
Could Trump Media keep its Bitcoin?
The next test for Trump Media’s Bitcoin [BTC] holdings can come from its debt. Holders of up to $1 billion in convertible notes could demand cash repayment on 30th November.
According to Interim CEO Kevin McGurn, the company favors using cash and credit and wants to “preserve as much of our Bitcoin as possible.” Management also clarified that the amount holders would request remains uncertain.
Bitcoin also made up about half of the $718.5 million in collateral backing the notes at quarter-end. Bitcoin-related securities and restricted cash made up the rest.
On 5th November, two transfers moved about 4,259 BTC to Crypto.com from wallets Arkham labeled as note collateral. The total was close to the 4,260.73 BTC listed in the filing.
The repayment deadline falls before Trump Media’s shareholder vote on the proposed TAE Technologies merger on 14th December. TAE drew another $100 million from Trump Media on 7th October, after the quarter-end cash snapshot.
Final Summary
- Trump Media posted $409.7 million in Q3 profits as crypto and equity gains reversed its Q2 losses.
- DJT rose by 0.99% to $4.10 in overnight trading after the earnings release.