Trump Media & Technology Group has committed approximately 73% of its bitcoin to an options program that allows the counterparty to reuse the coins, as revealed in its third-quarter 10-Q filed on Monday, just three weeks prior to the date when holders of its $1 billion in convertible notes may request cash. The parent company of Truth Social possessed around 15,649 BTC as of September 30, according to Chief Financial Officer Phillip Juhan during Monday’s earnings call, in addition to holding 7 million shares of BlackRock’s IBIT. Of those coins, 11,385.20 were allocated to what the company refers to as its bitcoin yield management program. The filing indicates that the program necessitates Trump Media to post bitcoin as collateral “that the counterparty can rehypothecate at their sole discretion.” The pledged coins carried a fair value of $951.4 million at quarter-end. The 10-Q does not name the counterparty. Another 4,260.73 BTC, valued at $356.1 million on Sept. 30, serves as collateral for the convertible notes and remains inaccessible for withdrawal or distribution until the conditions of the indenture are fulfilled.
Together, the two buckets comprise approximately 15,646 BTC, which constitutes nearly the entirety of the stack that Juhan outlined. Trump Media sells and buys covered calls and puts on bitcoin, settled in bitcoin, to “generate yield on these assets and increase our principal balance of bitcoin,” the filing says. Premiums arrive in bitcoin and are “immediately rehypothecated to our digital asset manager to reinvest.” At quarter-end it had written calls referencing 4,838.40 BTC at strikes from $68,000 to $92,000 and puts on 1,500 BTC at $75,000 to $80,000, all expiring in October. A risk factor spells out the trade-off. The company says its yield counterparties “may not be rated” by credit agencies, that it is limited in its ability to sell or use deployed bitcoin while the arrangements are open, and that where they are unsecured “we may be unable to recover deployed bitcoin in a counterparty insolvency.” Juhan stated that Trump Media acquired 4,359 bitcoin during the quarter, utilising proceeds from a partial divestment of its IBIT position, which reflects a transition toward “third-party institutional” management of its treasury. The bitcoin rally in the third quarter rendered Trump Media profitable in a theoretical sense.
Net income hit $409.7 million, fuelled by a $378.1 million gain on digital assets as bitcoin surged from $59,000 to around $84,000 between June 30 and September 30. Adjusted EBITDA showed a loss of $12.3 million, with total losses reaching $234.2 million in the first nine months. Prices have subsequently shifted in an unfavourable direction for the stack. Bitcoin hits $74,200, valuing 15,649 coins at $1.16 billion-down $145 million since quarter-end. The more significant examination lies within the notes. Holders of the $1 billion in 0% senior secured convertibles, due May 2028, can require Trump Media to repurchase them at full principal for cash on Nov. 30. General Counsel Scott Glabe announced that notices have been sent out, and holders have until the end of the month to respond. Therefore, the company cannot yet determine its total liabilities. Interim CEO Kevin McGurn said the plan is “a mix of cash and credit” rather than new equity. “We want to preserve as much of our Bitcoin as possible to continue our yielding strategy and allow that asset to recover,” he said.
The 10-Q says the company may enter a new credit facility to refinance some or all of the notes, but adds that “there can be no assurance” it can do so on acceptable terms. Juhan put gross financial assets at $2.3 billion, including $182 million in cash, $211 million in short-term investments and $1.7 billion in bitcoin and bitcoin-related assets. Trump Media isn’t the only treasury firm facing pressure. Strategy, the largest corporate holder, fell below its average cost on Monday. Trump Media is under increased political scrutiny following Democratic victories in Congress. Party leaders are set to focus on Trump family crypto ventures, while incoming Senate Banking Chair Elizabeth Warren gears up for her own oversight efforts. Shareholders will vote on Dec. 14 regarding the merger with TAE Technologies, with management aiming for a year-end closure.
