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Truth Social Faces Potential Market Correction as Lock-Up Period Ends

  //house-home.news-articles.net/content/2026/02/0 .. al-market-correction-as-lock-up-period-ends.html
  Published in House and Home on Friday, February 6th 2026 at 2:11 GMT by WSB-TV
      Locales: Georgia, New York, Florida, UNITED STATES

Friday, February 6th, 2026 - Investors in Truth Social, the social media platform linked to former President Donald Trump, are bracing for a potentially significant market correction next week. The expiration of a crucial lock-up period promises to unleash a wave of share sales from insiders, raising concerns about the future stability - and valuation - of the company.

For those unfamiliar, the lock-up period is a standard practice following a Special Purpose Acquisition Company (SPAC) merger, like the one that brought Truth Social (originally X2 Corp) to the public market via Digital World Acquisition Corp. Its purpose is to prevent a rapid and potentially devastating sell-off of shares by early investors, allowing the newly public company time to establish itself and build investor confidence. The intent is to create a more stable foundation for long-term growth.

However, Truth Social's journey since going public has been anything but stable. While the initial trading price peaked at $58, the stock quickly lost ground, plummeting to around $35 within a matter of days. As of Wednesday, the stock closed at $39.68, a figure that many analysts believe is artificially inflated by dedicated Trump supporters and speculative trading, rather than robust financial performance.

Financial analyst Peter Mallios warns that the removal of the lock-up restriction will likely trigger a significant price decline. "Right now, these shares are propped up by hope and the fervent support of Trump supporters," Mallios explained. "But once those insiders are able to sell, you're going to see a tremendous amount of pressure on the stock price." He anticipates a drop below $20, a level that would represent a substantial loss for recent investors.

Beyond the Price: The Underlying Challenges

The impending sell-off isn't simply a technical correction; it underscores the fundamental challenges facing Truth Social. Unlike established social media giants like Facebook, X (formerly Twitter), and Instagram, Truth Social has struggled to attract a broad user base. While it enjoys strong loyalty within a specific political demographic, its appeal remains limited, hindering its ability to generate substantial advertising revenue or compete effectively in the crowded social media landscape.

The platform's core problem isn't necessarily the technology itself, but the limitations of its target audience. While niche platforms can thrive, relying solely on a highly polarized user base presents inherent scalability issues. Mainstream advertisers are often hesitant to associate with platforms perceived as politically biased, further limiting revenue opportunities.

Trump's Media Strategy and the Bigger Picture

Analysts suggest that Truth Social isn't solely about building a successful social media company. Instead, it appears to be a key component of Trump's broader media strategy. "It's part of a larger media play by Trump," Mallios stated. "It's a way for him to communicate directly with his supporters without relying on mainstream media." In this context, the financial success of the platform might be secondary to its function as a direct communication channel and a rallying point for his political base.

However, even as a communication tool, the platform faces challenges. The cost of maintaining a public company, even a relatively small one, is significant. Without a viable path to profitability, Truth Social could become a financial drain, potentially impacting Trump's other business ventures.

What to Expect Next Week The coming week will be critical for Truth Social. The volume of shares traded is expected to surge as insiders capitalize on their holdings. The extent of the sell-off will depend on a variety of factors, including the number of shares released, overall market conditions, and investor sentiment.

Some analysts believe that a significant price drop could trigger a cascade of selling from retail investors, further exacerbating the decline. Others suggest that Trump himself might intervene to shore up the stock price, potentially through public statements or even direct purchases. However, such actions would likely be viewed as temporary measures, masking the underlying weaknesses of the business.

The expiration of the lock-up period isn't just a financial event; it's a litmus test for Truth Social's long-term viability. Whether the platform can weather the storm and demonstrate a path to sustainable growth remains to be seen. The outcome will undoubtedly have implications for the social media landscape and the future of Trump's media empire.