Trump’s Truth Social to Go Public After Merger Approved
Donald Trump’s social media platform Truth Social got shareholder approval Friday to go public in a deal that could net the former president more than $3.4 billion – on paper at least.
Shareholders of Digital World Acquisition Corp., the blank-check company seeking to merge Trump Media & Technology Group, approved the plan in a vote Friday after multiple delays over the past year.
Trump holds about 58% of the struggling social media platform, which he reportedly tried to sell to Elon Musk last summer as the merger with Digital World faced legal challenges.
Despite his pressing need for cash in the face of billions in legal judgements, however, Trump will likely have to wait at least six months before he could cash out, because major shareholders of the new company will be under what’s called a “lock-up” provision
Lock-up provisions are a common restriction used on Wall Street to prevent big, early investors from dumping their shares when a company goes public, which could hurt a stock’s price by suggesting they don’t have confidence in the company. It is possible for the new company to waive some or all of the lock-up.
The merger agreement also calls for Trump to get another $1.5 billion in stock if shares keep performing well, Bloomberg said.
Trump isn’t the only one who stands to benefit from the deal. Former California Rep. Devin Nunes, who gave up his seat in Congress to become CEO of the Trump Media, will have a stake worth $4.9 million, while DWAC CEO Eric Swider and Trump Media CFO Phillip Juhan look to gain $7.7 million and $21 million, respectively, Bloomberg reported.
Shares of Digital World had gained about 3% after the market opened Friday, but took a dive once the results of the vote were revealed. The stock sank $3.23, or 7.5%, to $39.58 in late morning trading following the vote. Shares have more than doubled since the start of the year, though it’s down from a high of $58.72 reached in late January.
The stock will soon take on the ticker symbol DJT — Trump’s initials — on the Nasdaq, according to regulatory filings, and could start trading in Digital World’s place as soon as Monday, The Wall Street Journal reported. The same ticker symbol was used by Trump Hotels & Casino Resorts before it filed for Chapter 11 bankruptcy protection in 2004, The Associated Press noted.
Some observers say Digital World’s stock run-up this year belies the value of the money-losing Truth Social, which Trump created to serve as a conservative social media site after he was banned from Facebook and Twitter, now known as X, after the Jan. 6, 2021 Capitol riot. He’s since been reinstated to both sites, but is contractually obligated to post first on Truth Social, and has limited his use of the larger sites.
Trump Media doesn’t disclose user numbers, ABC News reported, but research firm Similarweb estimates that Truth Social had roughly 5 million active users in February. That compares with more than 2 billion for TikTok and more than 3 billion for Facebook. Trump himself has 7 million followers on Truth, a fraction of the 87 million his account has on X, which was his favored platform while in office.
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