Truth Social, Donald Trump’s money-hemorrhaging Twitter knockoff, is going public, a move expected to provide a necessary lifeline to the struggling business while infusing the former president’s personal coffers with billions in desperately needed funds.
On Friday, shareholders of Digital World Acquisition Corporation, a SPAC, or, so-called blank-check company, approved a merger with Trump Media & Technology Group, which has blown through much of its available cash after earning just $1.07 million in revenue during the third quarter of 2023. According to SEC filings, Trump Media generated a paltry $3.38 million in revenue over the first nine months of 2023, booking a $49 million net loss during the same period.
DWAC’s stock was trading at $44 a share prior to the merger announcement, meaning Trump Media, which will begin trading as early as next week under the ticker DJT, could launch with a market cap exceeding $5 billion. Yet, following the announcement, DWAC shares quickly plummeted, with sellers vastly outnumbering buyers, which pared its valuation nearly 10 percent by 11 a.m.
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Trump’s own stake in the business, subject to a six-month lockup period during which he cannot sell his shares, may be worth upward of $3 billion on paper. However, the half-year wait means Trump will not be able to pay off his eye-popping legal debts with the just-out-of-reach windfall unless he gets special permission from the merged company’s board of directors to liquidate his position early.
The road to Friday’s deal has been pocked with trouble, getting hamstrung at nearly every turn by lawsuits, and accusations of self-dealing and financial malfeasance. A pair of former contestants on Trump’s NBC reality TV competition, The Apprentice, claimed in a recent lawsuit that the 45th POTUS was attempting to dilute their stake in the company and had tried to get one of them to sign over his shares to Trump’s wife Melania. DWAC and former CEO Patrick Orlando have sued each other in similarly bitter legal feuds, with DWAC calling the ousted chief exec “reckless and irrational” and Orlando went to court to try and block the planned merger over his own claims of being shortchanged.
Friday’s deal gives Truth Social, which was formed by Trump after he was booted off Twitter, now X, for repeated and flagrant rules violations, a new lease on its young, troubled life. Trump, who will own 58.1 percent of the company, now may see a glimmer of hope in raising sufficient cash to cover a $454 million appeal bond in his New York State civil fraud case. New York Attorney General Letitia James said she is prepared to begin seizing Trump’s properties by Monday, when the deadline to post the bond expires.
At the same time, Truth Social’s user base has shrunk nearly 40 percent year-over-year, and experts say the financials, as they stand now, are highly misleading.
“The stock price is clearly a bubble,” Yale Law School professor Jonathan Macey told CNN. “No rational investor would take the stock at face value, especially if they had to hold it for any length of time.”
