Trump’s Truth Social is headed for Wall Street in merger that could reap billions
Donald Trump’s social media platform that launched in the volatile aftermath of the January 6 attack on the US Capitol is headed for Wall Street.
Shareholders of his Truth Social platform voted on Friday to take the company public, a move that could raise the former president’s net worth by tens of millions of dollars as he desperately tries to find cash for the court-ordered judgments against him.
Mr Trump will need to find money from his own coffers or get help from a surety company to post an appeals bond by Monday that would block enforcement of a $454m penalty after a New York judge found that he defrauded banks and insurers.
His attorneys are asking a state appeals court to pause the judgment against him while he appeals without having to fork over tens of millions of dollars, which they called a “practical impossibility,” with rejections from roughly 30 bond companies who won’t take his prized real estate empire as collateral.
Political action committees supporting the Republican Party’s likely nominee to face President Joe Biden in November are also hemorrhaging tens of millions of dollars to pay his legal bills and attorneys’ fees, months before a summer of criminal proceedings and the general election.
The public debut of Truth Social’s parent company Trump Media & Technology Group could be a massive boost to the former president’s financial state – he could rake in more than $3bn from his investment.
But he won’t see any immediate return.
On Friday, after delays from investigations from regulators and the US Department of Justice, Truth Social shareholders approved a long-anticipated merger between Trump Media and the publicly traded shell company Digital World Acquisition Corporation.
Under the terms of the agreement, major shareholders of Trump Media cannot sell their shares for six months. That stipulation – commonly used to prevent newly public entities from signalling internal collapse or a lack of faith in the company’s future – applies to the former president.
Mr Trump has a 60 per cent stake in the company, which has been his presidential campaign’s de facto platform, reaping millions of dollars’ worth of free media coverage every time he fires off an incendiary post.
Then-President Trump was permanently suspended from Twitter “due to the risk of further incitement of violence” after failing to stop a mob from storming the halls of Congress on 6 January, 2021 and blasting out dangerously false claims about the 2020 presidential election.
His account was restored under new ownership from Elon Musk. But the former president has remained on Truth Social, where he routinely attacks his political rivals and rages against prosecutors, judges, lawsuits and the 88 criminal charges against him in all-caps rants.
Because he holds an enormous amount of influence over the company and the future of the platform, he could try to subvert the so-called “lockup” provision and ask Digital World’s seven-member board to waive any restrictions that would prevent him from selling off shares.
That board is likely to have several allies, including his oldest son Donald Trump Jr and former administration officials.
Digital World’s stock price has rebounded to roughly $43, or about 15 per cent below its peak last month when the US Securities and Exchange Commission gave the merger a greenlight.
The value of Truth Social’s stock – to be listed on Wall Street as DJT, for Donald John Trump – also is largely directed by the thousands of Trump supporters who bought into the company and use the platform. The stock is widely seen as a “meme stock,” with shares driven by individual investors rather than any other market factors, but one that could spark interest more broadly.
That “DJT” stock symbol was used for only one other publicly traded company: Trump Hotels and Casino Resorts, which filed for bankruptcy in 2004.
Trump Media, meanwhile, has lost tens of millions of dollars since its launch in 2022. The company generated $3.3m in advertising revenue within the first nine months of last year, according to filings.
With the platform’s official launch two years ago, Mr Trump said the company would “stand up to the tyranny of Big Tech,” viewed among right-wing figures as too constrictive or conspiring to remove their views after users were kicked off for other platforms for violating their terms of service about Covid-19 misinformation, violence and harassment.
Federal investigations have stymied Trump Media’s planned merger with Digital World over the last two years. Prosecutors have launched investigations into insider trading and money laundering at Digital World, which reached an $18m settlement with the Securities and Exchange Commission last year.
Mr Trump reportedly met with Elon Musk last summer to see whether he wanted to buy it from him, according to The Washington Post.
The deal also has been hinging on four lawsuits in three states targeting Trump Media, Digital World and its co-founders.
Ahead of the merger’s approval, Digital World outlined potential risks – including the former president’s ability to vote in his own interest as the controlling stockholder. The company also noted Trump Media’s expectation that it would continue to lose money on its operations “for the foreseeable future.”
On Thursday night, hours before the vote, Mr Trump posted on his Truth account: “TRUTH SOCIAL IS MY VOICE, AND THE REAL VOICE OF AMERICA!!! MAGA2024!!!”
