Trump Media & Technology Group (TMTG), the company that owns Truth Social, has received FEC approval to merge with Digital World Acquisition Corp. (DWAC).
The latter is a purpose acquisition company, and its merger with TMTG means that Truth Social will soon be a publicly traded entity.
According to Reuters, Truth Social — or, rather, its parent company — will be valued at as much as $10 billion, which is reportedly about half the valuation of the competing social media platform X.
“We are immensely proud of the strides we’ve taken towards advancing the Business Combination,” DWAC CEO Eric Swider said in a statement.
“This achievement marks a significant milestone for us. Our sincere thanks go to our shareholders for their unwavering support. We are excited to soon share the news of the Business Combination’s approval process with them,” he added.
BREAKING: The SEC has approved the merger of $DWAC and Truth Social. President Trump is expected to profit almost 4 BILLION dollars given his 58% stake in the company and the current stock price.
The leftists trying to bankrupt Trump are in shambles. pic.twitter.com/3VB1xNjjAY
— Pro Swing Trading (@Pro__Trading) February 16, 2024
The merger and valuation are remarkable because Truth Social has a “limited user base” and has sustained years of losses.
“The value assigned to the deal by the stock market has jumped more than threefold since January, as [former President Donald] Trump tightened his grip on the Republication nomination for president. Trump will own between 58.1% and 69.4% of the combined company, depending on the extent to which investors back the deal,” Reuters notes.
In a filing submitted Wednesday, DWAC reportedly said Trump will likely divest his stake in Truth Social if he’s reelected president.
That said, the deal isn’t exactly finalized yet.
“To be sure, Digital World also disclosed new obstacles to the deal being completed. One of them is former Digital World CEO Patrick Orlando, who helped create Digital World in its current form and controls the sponsoring entity behind it. Digital World said in the filing that Orlando may hold up the deal because he wants to receive additional compensation,” according to Reuters.
If you’ve got #DWAC go vote for this poll and let Patrick Orlando know what you think about his nonsense. #TruthSocial https://t.co/MNfEjWVpKL
— Forgiven Sinner (@BigJakeTheFish) February 13, 2024
The Washington Post, a leftist outlet, notes that Trump could wind up earning a great deal of money from this merger, as the merger would “unlock $300 million in investor funds.”
“The approval is a victory for Trump, who will hold more than 78 million shares in the post-merger company, a filing shows — a stake that, at current prices, would be worth nearly $4 billion,” according to the Post.
“Trump, who would own between 58 and 69 percent of the company, and other investors could earn tens of millions more shares through a provision, known as an ‘earnout,’ tied to the stock’s performance,” the Post reported.
But there is a catch.
Jay Ritter, a finance professor at the University of Florida, told the Post the money is “paper wealth … with the emphasis on ‘paper,’ since his company [TMTG] shares cannot currently be sold.”
Why not? Because TMTG’s top stockholders, including Trump, agreed to a “lockup” period that prohibits them from selling any shares during the first six months after the merger officially goes through.
“If the merger occurs in April, for instance, Trump would not be able to sell his shares until October, at which point their value may have changed considerably,” the Post notes.
The problem, according to Ritter, is that TMTG’s valuation doesn’t match Truth Social’s performance.
“Trump Media generated $3.4 million in revenue and lost $49 million during the first nine months of 2023,” according to the Post.
$DWAC Nov. 13 filings tell an interesting story:
1. the companies are moving closer to merger but still have a ways to go.
2. the revenue at TMTG is paltry. It posted only $1.192M in Q2, and $2.453 in H1 (which means down Q over Q, not great for what many hope will be a growth… pic.twitter.com/QfLpjzKQCl— the gutter (@stockgutter) November 17, 2023
TMTG is “a money-losing company that generates less than $5 million per year,” Ritter said, adding that DWAC in turn is “a classic meme stock, whose price is totally unrelated to the underlying fundamentals.”
In a statement, TMTG chief executive Devin Nunes (the former Republican congressman) for his part sounded excited about the company’s plans “to accelerate our work to build a free speech highway outside the stranglehold of Big Tech.”
The last thing to know is that a bunch of Trump’s allies are expected to be nominated to the post-merger company’s board, including Donald Trump Jr., Kash Patel, and others.
Writers and editors can be contacted at [email protected] with feedback, tips, or corrections.
V. Saxena is a staff writer with a decade of experience as a professional writer, and a lifetime of experience as an avid news junkie. He holds a degree in computer technology from Purdue University. Saxena also contributes to BizPac Review.
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