How would Truth Social going public benefit Donald Trump?
Amidst Donald Trump’s legal and financial woes, he got a bit of good news on Friday. Investors gave the greenlight for his Truth Social to go public.
Donald Trump could be set to reap a windfall from his Truth Social app after shareholders of Digital World Acquisition Corp approved a merger with the parent company of the networking platform, Trump Media & Technology Group. The former president has a majority stake in the company that holds his app Truth Social, which was created after his accounts on other social media platforms were removed following the January 6, 2021 attack on the US Capitol.
The deal is currently worth about $5.7 billion, or potentially more, based on how Digital World’s shares have recently traded. It would also inject around $300 million cash into Trump Media & Technology Group that would help shore up Truth Social which is operating at a multi-million dollar loss.
How would Truth Social going public benefit Donald Trump?
With the merger, Trump Media & Technology Group (TMTG) could be publicly traded on the Nasdaq stock market. The deal values the former president’s majority stake in the company that holds his app, Truth Social, at roughly $3.3 billion. This would provide the former president, who is facing multiple legal challenges, with much needed cash.
He was recently found liable of fraud for previous business dealings in New York and is now facing a fine of $464 million, with interest accruing daily, that is pending payment on 25 March. However, there is one ‘minor’ snag, he cannot sell any of his shares in the combined company for six months. Nor, based on terms to which he previously agreed, can he borrow against them.
That has not stopped Trump supporters like @racinrob on Truth Social from flogging the stock saying that it “will help President Trump get his bond, buying 4 shares by all will benefit all,” posted this week.
It’s questionable how the stock will perform once it goes public as well. While the value of Digital World Acquisition Corp has almost quadrupled since the merger with TMTG was announced in 2021, mainly driven by Trump supporters and other retail investors, after the shareholders’ approval on Friday it dropped 10 percent.
Truth Social, with which Trump has an exclusivity agreement, has failed to gain widespread appeal. It currently has 8.9 million sign-ups as of February, of which 6.7 million follow the former president. In comparison, he had 88 million followers on X, formerly known as Twitter, when his account was suspended. That social media platform has around half a billion users according to its owner Elon Musk.