Early investor breached stock contract with Trump Media.

• A judge ruled that Trump Media must grant a larger share of stock to a sponsor who helped the company go public after breaching an agreement with one of its investors.
• The judge ruled that the blank-check firm DWAC underestimated the amount of stock that investor ARC Global should receive following the merger that made Trump Media public.
• Before the ruling, DJT's majority-owner Donald Trump and others will be able to sell their shares in the Truth Social maker.

A judge ruled that the company must grant a larger share of its stock to an investor who helped it go public, as it had breached an agreement with that investor.

On Monday, the Delaware Chancery Court issued an order just three days before ARC Global and other insiders, including majority-owner Donald Trump, will be allowed to sell their shares in the company behind Truth Social.

If those insiders choose to sell their shares, they could potentially earn a substantial profit. However, doing so could also harm investor confidence and further decrease the value of Trump Media, which has already lost billions of dollars in value during a prolonged stock market decline.

In the Delaware case, Vice Chancellor Lori Will ruled that Digital World Acquisition Corp. (DWAC) underestimated the amount of stock owed to ARC Global as part of the March merger that made Trump Media public.

In her 44-page ruling, Judge Will determined that the stock-conversion ratio proposed by ARC was excessively high and rejected several claims made by both ARC and DWAC as "unfounded" distractions.

DWAC, a special purpose acquisition company, was bought by ARC with Class B shares, with the intention of merging with another business and going public.

Since the company issued more Class A shares after going public, a different stock-conversion ratio applied when the Class B shares of DWAC merged with Trump Media.

DWAC and ARC have different opinions on the ratio, with DWAC suggesting 1.3481 to 1 and ARC proposing 1.8178 to 1. To find a compromise, the ratio will be set at 1.4911 to 1.

In a separate order, Will stated that ARC is entitled to 8,186,345 Class A shares in conversion for its 5,490,000 Class B shares.

She ordered the parties to work with an escrow agent "to release the appropriate number of shares to satisfy ARC's conversion rights" so that the investor can freely sell or transfer those shares upon the expiration of the contractual lock-up.

On Thursday, the lock-up agreement that prevents Trump and other insiders from selling their shares for six months after the start of trading as DJT on the Nasdaq will expire.

Despite reporting multimillion-dollar net losses on little revenue in its latest quarterly earnings, the company's market capitalization remains above $3.3 billion.

Analysts view individual investments in Trump Media as a way to back the Republican presidential candidate and predict his political success.

Nearly half of Trump's on-paper net worth, calculated by Forbes, is worth approximately $2 billion as of midday Tuesday, which he owns through his 114,750,000 shares in the company's stock.

Last week, Trump stated that he has no intention of selling.

The announcement sent DJT shares soaring.

Numerous lawsuits with ARC and its founder, Patrick Orlando, as well as others involved in the public merger, have put Trump Media in a legal bind.

In a Florida lawsuit, Trump Media has stated that ARC and another investment vehicle, United Atlantic Ventures, are planning to sell over 18 million DJT shares immediately after the lock-up period ends.

On Monday, Trump Media filed for an "emergency" court hearing in the same lawsuit.