On Friday, former U.S. President Donald Trump edged closer to a significant financial gain through his social media venture, following the approval of a merger by investors in a special purpose acquisition company (SPAC), potentially valuing the deal at around $5.7 billion.
This merger places Trump’s stake in Truth Social’s parent company at approximately $3.3 billion, a critical boost amidst his ongoing legal challenges, including a notable $454 million judgment in a civil fraud case in New York.
The merger, facilitated by Digital World Acquisition Corp (DWAC), aims to introduce Trump Media & Technology Group (TMTG) to the stock market.
However, the completion of this merger faces uncertainties, including lawsuits from Digital World’s former CEO, Patrick Orlando, and Trump’s former associates, Andy Litinsky and Wes Moss, who are seeking additional shares for their roles in the deal.
Despite these challenges, Trump cannot sell his shares or use them as collateral for six months after the merger, in adherence to prior agreements.
Moreover, the deal promises a $300 million boost to TMTG, which reported a $10.6 million operational loss in the first nine months of 2023.
This influx is vital for Truth Social, which has been subsisting on borrowed funds.
The valuation of TMTG could soar to $5.7 billion post-merger, with a potential to reach $8.6 billion, taking into account further financial instruments.
This development has sparked interest among Trump supporters, propelling Digital World’s stock prices despite a recent 10% decline following the deal’s approval.
This valuation contrasts sharply with Elon Musk’s social media platform, X, which dwarfs Truth Social in user numbers and market valuation.
TMTG, aimed at reconnecting Trump with his followers post his ban from major social platforms, has encountered numerous obstacles since its announcement in 2021, including scrutiny from U.S. regulatory bodies.
Despite these hurdles and a significant settlement with the SEC over disclosure violations, Trump continues to use Truth Social as his primary communication channel with supporters, especially after being banned from X, where he once boasted millions of followers.
This deal represents a key development for Trump, especially as he eyes a return to the presidential race, holding a significant ownership stake in the merged entity, which varies based on investor support.