New York, NY – Former President Donald Trump’s financial woes have taken a new turn as he faces a hefty $464 million fraud fine. Amid this dilemma, Trump Media, the company behind the social media platform Truth Social, is on the brink of going public through a merger with Digital World Acquisition Corp. With a stake of over 58% in the combined entity and a value surpassing $3 billion, Trump seems to be banking on this move to potentially alleviate his financial burdens.
Digital World, a special purpose acquisition company (SPAC), created solely for the purpose of acquiring and taking another firm public, has attracted attention due to its association with Trump Media. Despite warnings from auditors about the risks associated with the business, Trump loyalists, predominantly individual investors, have shown unwavering support for the deal.
The risks ahead are substantial, with unresolved legal issues and past settlements over fraud charges clouding the merger. Nonetheless, enthusiasts like Chad Nedohin see this as an opportunity to show support for free speech and the country as a whole. The impending approval of the acquisition is expected to lead to Trump Media’s shares trading on the Nasdaq under the ticker DJT.
While the merger could infuse Trump Media with over $200 million in cash for expansion, it is unlikely to alleviate Trump’s immediate financial obligations, including the massive fraud penalty in New York. As Trump’s supporters rally behind the deal, analysts caution that the share price of Digital World may be inflated, resembling a “meme stock” detached from fundamentals and destined for a downturn.
As the merger progresses, uncertainties loom over the future of Truth Social, which, despite portraying itself as an alternative to major social media platforms, remains relatively small in terms of user engagement. Institutional investors have shown lesser interest in recent trading activities of Digital World, raising questions about the sustainability of the share price surge.
The landscape of the financial sector remains complex, with varying opinions from experts like University of Florida professor Jay Ritter and Vanda Securities senior vice-president Marco Iachini. Regardless of the outcome, Trump stands to benefit significantly from the merger, posing a substantial shift in value transfer that may prove lucrative for the former president.