Trump potentially nets around $3 billion with merger approval for his social media company
Shareholders of Digital World Acquisition Corp voted in favor of uniting with Trump Media & Technology Group at a time when the former president is running out of time to make a $454 million payment in connection with a civil fraud case
Donald Trump’s path to the stock market has been cleared. The shareholders of Digital World Acquisition Corp (DWAC), a publicly traded shell company, voted on Friday to merge with Trump Media & Technology Group (TMTG), the company that owns Truth Social — an operation that, on paper at least, will make him about $3 billion richer, although it will be difficult to materialize those profits. Shares will be traded under the stock ticker DJT, the former president’s initials.
The merger comes just as the former president is running out of time to make a $454 million payment in connection with a civil fraud conviction in New York, which he is appealing. The former president assures that he cannot obtain a bond to cover the figure and risks having his properties seized. Meanwhile, the Republican also claims that he has almost $500 million in cash, which he has said he will use to defeat President Joe Biden in the November election. However, thus far, rather than using money from his pocket to finance his campaign, he has instead used millions of dollars from donations to pay his legal expenses for the various civil and criminal proceedings he is facing.
The regulatory filings indicate that the former president would own 78.75 million shares of the combined company, controlling at least 58.1% of the voting rights of New Digital World, the merged company. At the current share price of around $40 per share, his participation will be valued, on paper at least, at $3.37 billion at the current market price. “On paper” is an important note, since the market valuation of the company defies logic and it will be very difficult for it to materialize those profits. DWAC has become a meme stock, moving on impulse rather than the company’s economic fundamentals. The adjustment appeared to have begun on Friday, when shares fell over 11%.
The IPO may take effect next week, but he won’t be able to cash out for the time being. A “lock-up” provision restricts him from selling any of his shares or using them as collateral for a loan for a period of six months.
The regulatory filings reveal that Trump’s social networking company has minimal revenue and large losses. TMTG lost $49 million in the first nine months of last year, and brought in just $3.4 million in revenue.
TMTG acknowledges that it needs to attract Republican voters to its networking site to be viable and admits that if Trump loses popularity or new controversies arise that damage his credibility or people’s desire to use a platform associated with him, there will be a financial cost.
Trump founded Truth Social when he was expelled from Twitter and Facebook for messages that content moderators considered to be inciting violence in connection with the assault on the Capitol on January 6, 2021. Elon Musk’s purchase of Twitter, since renamed X, has allowed Trump to return to the networking site. The billionaire has given free rein to misinformation on his platform, to which many spreaders of conservative hoaxes have returned.
That takes away some of the appeal of Truth Social, whose main hook is that it has exclusivity on the former president’s social media messages. Truth Social has never caught on with the general public, however. Trump himself has far fewer followers there (6.7 million) than he gained on Twitter and still retains, despite not publishing new messages there (87.5 million).
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