The former president is making a comeback to the stock market with the potential for significant financial gain.
In a vote on Friday, shareholders of the publicly traded shell firm Digital World Acquisition Corp. approved a deal to combine with the Trump family’s media company. This implies that the social networking site Truth Social, the main offering of Trump Media & Technology Group, will shortly start trading on the Nasdaq stock exchange.
Nearly 79 million shares, or the majority of the combined business, will be owned by Trump. The entire worth of his holding might be close to $3 billion if you double that by Digital World’s closing stock price on Friday, which was $36.94.
Laptops 1000The approval comes at a time when the likely Republican presidential nominee is battling for his life in court over a $454 million judgment related to deception.
However, Trump will not be able to take immediate advantage of the windfall from the sale until the board of the firm amends a “lock-up” clause that bars insiders from selling freshly issued stock for six months.
Once the merger is approved by shareholders, a publicly traded shell company that has agreed to purchase a private company takes the target company’s place on the stock exchange. If the recent fluctuations in Digital World’s price are any guide, Trump Media shareholders may have a difficult time.
Rather than large institutional and experienced investors, a large portion of Digital World’s investors are small-time investors who are either Trump supporters or are looking to profit from the frenzy. With the hope that the merger would proceed, those stockholders contributed to the stock’s more than twofold increase this year. However, the shares dropped by over 14% on Friday.
Trump’s previous attempt to enter the stock market failed. In 1995, Trump Hotels and Casino Resorts went public under the DJT symbol, which Trump Media will also trade under. Trump’s casino business filed for bankruptcy protection and was taken off the New York Stock Exchange’s list by 2004.
The regulatory documents made before Friday’s clearance enumerated many of the dangers that Digital World’s investors and the owner of Truth Social, assuming Trump Media becomes public.
The corporation stated that one danger is that, as a dominant shareholder, Trump would vote in his interest, which might not always be in the best interests of all shareholders. Digital World also mentioned Trump Media’s prediction that it would experience operating losses “for the foreseeable future” and the high failure rate of new social media platforms.
In the first nine months of last year, Trump Media lost $49 million, earning only $3.4 million in revenue and having to pay $37.7 million in interest.
Additionally, a group of seven individuals, including Donald Trump Jr., the son of the former president, were approved by DWA’s shareholders on Friday to occupy positions on the Trump Media board.
The others are Linda McMahon, the former head of Trump’s Small Business Administration; Robert Lighthizer, the former Republican representative to the United States on trade issues; and Kashyap “Kash” Patel, a national security aide in the White House under Trump.
Laptops 1000In October 2021, Trump Media and Digital World first disclosed their intentions to unite. Before Friday’s decision, the merger was the target of multiple lawsuits in addition to a federal investigation.
After the Jan. 6 uprising at the U.S. Capitol, Trump was barred from using popular social media sites like Facebook and Twitter. A year later, Truth Social was established on the platform now known as X. Since then, he has been let back into both, but he continues to use Truth Social as a platform for his message.
In a Thursday night post on the social media platform, Trump endorsed Truth Social, writing, “TRUTH SOCIAL IS MY VOICE AND THE REAL VOICE OF AMERICA!!! MAGA2024!!!”
Trump Media has not released the user count for Truth Social. However, according to research firm Similarweb, there were almost 5 million active users of the website and mobile app in February.
That is still more than other “alt-tech” competitors like Parler, which has been inactive for almost a year but is preparing a relaunch, and Gettr, which saw fewer than 2 million visitors in February, but significantly less than Facebook’s 3 billion and TikTok’s over 2 billion.
With a move into the public market, Trump’s social media company will soon have to provide more information.
Public firms are answerable to the shareholders who own the company’s stock, whereas private companies are answerable to their owners. Trump Media will have to provide federal authorities with its quarterly financial reports and any other significant news as soon as it goes public.
In this way, major marketers who don’t want to be connected to hate speech and other contentious issues are something that Truth Social is facing, along with some of the issues that X has been facing.
