The former president, Donald Trump, is returning to the stock market with the potential for significant financial gain.
The former president, Donald Trump, is returning to the stock market with the potential for significant financial gain. (Photo : by Doug Mills-Pool/Getty Images)
In a vote on Friday, shareholders of the publicly traded shell firm Digital World Acquisition Corp. approved a proposal 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 merged 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.
The approval comes at a time when the likely Republican presidential candidate is battling for his life in court for a $454 million judgment related to deception.
Once shareholders authorize the merger, a publicly listed shell company that has agreed to purchase a private firm takes the target company's position on the stock market. If the recent fluctuations in Digital World's price are any guide, Trump Media stockholders may have a difficult time.
Rather than large institutional and experienced investors, many of Digital World's investors are small-time investors who are either Trump supporters or 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 Past in the Stock Market and Risks Associated with Trump Media's IPO
Trump's last 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.
Many of the dangers that Digital World's investors and the owner of Truth Social, assuming Trump Media becomes public, would face were enumerated in the regulatory documents made before to Friday's clearance.
The corporation stated that one danger is that, as a dominant shareholder, Trump would be able to vote in his own interest, which would not always be in the best interests of all shareholders. Digital World also mentioned Trump Media's prediction that it will 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 sales and incurring $37.7 million in interest costs.
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.
In October 2021, Trump Media and Digital World initially revealed their intentions to unite. Before Friday's decision, the merger was the target of many lawsuits in addition to a federal investigation.
Following the Jan. 6 uprising in the United States, Trump was barred from using many major social media sites, including Facebook and Twitter. A year later, on the network now known as X, Truth Social was established. Capitol. 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, stating: "TRUTH SOCIAL IS MY VOICE, AND THE REAL VOICE OF AMERICA!!!" MAGA2024!"
Insights into Truth Social's User Base and the Implications of Going Public
To date, Trump Media has not released the user count for Truth Social. However, according to research company 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.
