Former President Donald Trump is facing a challenge as he seeks help from his followers to raise over $450 million for a civil fraud case he was convicted of. Trump warns that he risks having his properties seized if he cannot come up with the bail money. However, in a surprising turn of events, Trump is on the brink of finalizing a deal that could potentially make him $3.4 billion richer.
The shareholders of Digital World Acquisition Corp (DWAC) are set to vote on the merger with Trump Media & Technology Group (TMTG), the company behind Truth Social, Trump’s social network. The price of DWAC shares has skyrocketed in anticipation of the merger, leading to a market valuation that may not be sustainable.
Trump’s social media company, TMTG, has minimal revenue and large losses, according to the transaction prospectus. Despite this, Trump stands to gain substantially if the merger is approved. However, there are uncertainties surrounding the approval, as a significant shareholder with almost 15% of the capital is causing complications.
The merger could be executed within days or weeks if approved, but Trump is prohibited from selling his shares for the first six months. Additionally, the market valuation of DWAC may prove challenging to sustain, potentially leading to a collapse if not adjusted.
The prospectus reveals that Trump will control a significant portion of the merged company’s voting rights, but the company’s financial stability remains uncertain. TMTG has historically incurred losses and negative cash flows, relying on bridge financing to develop Truth Social. The success of the platform hinges on attracting Republican voters and Trump’s continued popularity.
Trump founded Truth Social after being banned from Twitter and Facebook for controversial messages. With Elon Musk’s purchase of Twitter allowing Trump to return to the platform, the appeal of Truth Social may be diminished. The company’s dependence on Trump’s popularity poses a significant risk, as his absence or legal troubles could impact TMTG’s business.
Despite the challenges and uncertainties surrounding the merger, Trump remains hopeful of a successful outcome. The future of Truth Social and Trump’s financial prospects hang in the balance as shareholders prepare to make a crucial decision in the coming days. Stay tuned for updates on this developing story.