Donald Trump is going back to the stock market and could make a lot of money in the process.
In a Friday vote, shareholders of Digital World Acquisition Corp., a publicly traded shell company, agreed to merge with Trump's media business. This means Trump Media & Technology Group, which owns the social network Truth Social, will soon start trading on the Nasdaq stock market.
Trump is expected to own most of the combined company — around 79 million shares. If we multiply that by Digital World’s closing stock price on Friday of $36.94, the total value of his stake could be close to $3 billion.
This approval comes at a time when Trump is facing a costly legal battle, with a $454 million judgment in a fraud lawsuit being the biggest one yet.
However, Trump will not be able to immediately benefit from the deal unless the company's board changes a provision that prevents insiders from selling newly issued shares for six months.
Trump’s presidential campaign did not immediately respond to the request for comment.
When a publicly traded shell company agrees to merge with a private company, the private company takes the place of the shell company on the stock exchange once the shareholders approve the combination. Recent activity in Digital World’s stock suggests that shareholders of Trump Media might have a rough time ahead.
Many of Digital World’s investors are small investors who are either supporters of Trump or looking to profit from the excitement, as opposed to big institutional and professional investors. They helped the stock more than double this year in anticipation of the merger. However, on Friday, the shares dropped by almost 14%.
Trump's previous venture into the stock market did not end well. Trump Hotels and Casino Resorts went public in 1995 under the symbol DJT — the same symbol that Trump Media will trade under. By 2004, Trump’s casino company had filed for bankruptcy protection and was delisted from the New York Stock Exchange.
Prior to Friday’s approval, Digital World’s regulatory filings listed many of the risks its investors face, as well as those of the Truth Social owner once Trump Media also becomes publicly traded.
One of the risks mentioned was that Trump, as the controlling stockholder, would have the right to vote in his own interest, which may not always align with the interests of all shareholders. Digital World also noted the high failure rate for new social media platforms, as well as Trump Media's expectation of incurring losses from its operations “for the foreseeable future.”
In the first nine months of last year, Trump Media incurred a $49 million loss, brought in only $3.4 million in revenue, and had to pay $37.7 million in interest expenses.
DWA’s shareholders also voted on Friday to approve a group of seven individuals, including Donald Trump Jr., to serve on Trump Media's board. Among the others are former Republican Rep. Devin Nunes, who is set to be the company’s CEO; Robert Lighthizer, who served as Trump’s U.S. trade representative; Linda McMahon, who ran the Small Business Administration under Trump; and Kashyap “Kash” Patel, a White House national security aide during the Trump administration.
Trump Media and Digital World initially announced their plan to merge in October 2021. Besides a federal investigation, the deal encountered a series of lawsuits leading up to Friday’s vote.
Truth Social was introduced in February 2022, one year after Trump was banned from major social platforms like Facebook and Twitter, which is now called X, following the Jan. 6 insurrection at the U.S. Capitol. He has since been reinstated to both, but has chosen to use Truth Social as a platform for his message.
Trump advertised Truth Social in a post on the social media network Thursday evening, stating: "TRUTH SOCIAL IS MY VOICE, AND THE REAL VOICE OF AMERICA!!! MAGA2024!!!"
Trump Media has not yet revealed Truth Social’s user numbers. However, research firm Similarweb estimates that it had about 5 million active mobile and web users in February. This is significantly lower than TikTok’s over 2 billion and Facebook’s 3 billion, but still higher than other “alt-tech” rivals like Parler, which has been offline for almost a year but is planning a comeback, or Gettr, which had fewer than 2 million visitors in February.
Entering the public market means that Trump’s social media business will soon need to disclose more information.
Private companies are answerable to their owners, while public ones are accountable to the shareholders who own the company’s stock. Once publicly traded, Trump Media will be obligated to report its quarterly financial results as well as other important news to federal regulators.
In this way, Truth Social encounters some of the same issues that X has been dealing with — mainstream advertisers who do not want to be linked with hate speech and other controversial content.
