Trump poised for billions as Truth Social stock deal passes

To cover a $464 million (£365 million) fraud fine, Donald Trump seems to be in a financial bind. Is it possible for the Truth Social stock deal to save him?

After most Digital World Acquisition Corp. shareholders decided on Friday to acquire the company, Trump Media—which operates the social media platform Truth Social—is about to go public.

At least 58% of the combined business, or around $3 billion at the present price of Digital World’s shares, is expected to go to Mr. Trump.

Mr. Trump stands to gain a staggering amount of money in return for a company whose own auditor said it was in danger of failing the previous year.

Shares in Digital World dropped more than 13% on Friday after the approval, ending the day at $36.94.

Backers of Digital World – the vast majority of whom are individual investors instead of Wall Street firms, many apparently Trump loyalists – seemed unfazed.

“This is just the start,” Chad Nedohin, a deal supporter, said on his show DWAC Live on the video platform Rumble after the approval was announced. “There’s no reason to freak out.”

Digital World, or DWAC (pronounced D-whack), is what is known as a SPAC, or a shell business created expressly to buy another firm and take it public.

The company will now be renamed Trump Media & Technology Group and could start trading on the Nasdaq stock exchange under the ticker DJT as soon as next week.

The new firm may give the former president an exemption from the minim

um six-month ban on selling or transferring his shares.

Another option for Mr. Trump would be to try to obtain a loan secured by the share value. However, given the possible hazards of the business, analysts predicted that a bank would likely lend him far less than the shares’ face value in this instance.

Some of his admirers are still holding out hope that their support will assist despite this.

Mr. Nedohin, who goes by Captain DWAC on Truth Social and calls himself a Canadian “worship leader” on his website, declined to be interviewed.

However, he urged investors to approve the purchase this week on his show, suggesting that it may aid the former president in his legal fights.

“Who knows? If the merger closes on Friday at 10 a.m. and Trump suddenly owns… shares in DJT valued three, four, or five $10 billion? He claimed he could simply use that as leverage to obtain a loan.

He continued: “This is putting your money where your mouth is for free speech, to save your country, potentially losing it all.”

Experts say there’s a big chance investors in Digital World may lose money on their investment.

Since the announcement of plans to buy Trump Media in 2021, share values have fallen from their peak.

However, they continue to suggest that Trump Media is worth approximately $5 billion even after Friday’s decline, which is significant considering the company lost almost $50 million and only made $3.3 million in revenue in the first nine months of last year.

Through the transaction, Trump Media will receive an infusion of capital exceeding $200 million, which it may utilize for development and expansion.

Truth Social, which opened to the public in 2022 and bills itself as a rival to well-known social networking sites like Facebook and Twitter, is still modest for the time being.

8.9 million sign-ups, according to its regulatory filings, Prospective investors are cautioned by Trump Media that it does not monitor measures such as user growth or engagement that may provide them with a sense of its operation. Outside firms estimate that Truth Social received almost five million visits in February. In comparison, Elon Musk’s X, formerly Twitter and recently valued by one investor at almost $14 billion, garnered more than 100 million visitors.

According to Marco Iachini, senior vice president of research at Vanda Securities, individual investors flocked into Digital World stock when the Trump contract was announced, as well as again in January after he won the Iowa primary.

Prior to the vote this week, he stated that there had been less activity, indicating that professional firms may be driving the trading.

Whatever motivates buyers, Mr Trump, whose primary contributions to Trump Media have been his name and posts on the site, appears to be the biggest beneficiary.

“It’s an enormous transfer of value from [investors]… to Trump, which stands to be extremely lucrative for him,” says Michael Ohlrogge, a law professor at New York University who has studied listings of companies such as Trump Media.