Shares of former President Donald J. Trump’s social media company could begin trading on the stock market as soon as Monday, immediately increasing his net value by about $3 billion – wealth that Trump he may find a way to cover mounting legal bills as he seeks a second presidential term.
Trump urgently needs money by Monday to cover a $454 million high-quality imposed by a New York judge who found that he fraudulently inflated the value of his properties in transactions with banks. Earlier this week, he asked the appeals court to suspend the sentence or accept a much lower bail. Last 12 months, certainly one of his political motion committees spent $50 million on legal bills.
The upcoming public debut of Trump Media & Technology Group – the parent company of digital platform Truth Social – could provide Trump with a technique to raise cash, however it won’t be easy.
Trump Media goes public by merging with publicly traded Shell a company called Digital World Acquisition Corporation. Digital World shareholders are expected to approve the merger on Friday after years of delays brought on by regulatory and criminal investigations that got here near derailing it.
Under the terms of the merger agreement, Trump Media’s major shareholders are prohibited from selling their shares for six months. The so-called lock-up provision, which normally applies to any company going public, is meant to limit the variety of shares available on the market and trading, in addition to to avoid the impression that early shareholders wouldn’t have faith in the company’s future.
But because Trump has enormous power over the company, with greater than 60 percent of the shares, and his brand is crucial to Trump Media’s success, he could try to avoid these provisions. Trump may ask Digital World’s board to waive restrictions on stock sales before its proposed merger with Trump Media involves a vote.
He could also wait until Trump Media is up and running before asking board members — a few of whom also serve on Digital World’s board — to lift the suspension. Trump Media’s seven-member board is more likely to conform to such a request, partially since it is anticipated to incorporate three former members of his administration. His oldest son, Donald Trump Jr., will even join the board.
Trump could also get the board’s blessing to transfer his shares right into a trust or gift them to a member of the family. By placing them in a trust, Trump will find a way to make use of the shares as collateral for a loan; a member of the family could also borrow against these shares.
If the shareholder vote on Friday goes as expected, Trump Media will begin operating under the symbol “DJT” next week. Based on Digital World’s current stock price, Trump’s 79 million shares shall be value greater than $3 billion, on top of the $2.6 billion that Forbes estimated Trump it was value it in October.
But it’s hard to predict how Trump Media’s stock will perform, on condition that it’s currently losing tens of tens of millions of dollars and generated just $3.3 million in promoting revenue in the first nine months of last 12 months.
Once the merger is complete, Digital World could have about 400,000 shareholders – most of them individual investors – will turn out to be shareholders of Trump Media. Many Digital World shareholders have long supported the company’s – and Trump’s – stock in Truth Social. Starting in January, as Trump inched closer to the Republican nomination and as the likelihood of a deal approval increased, Digital World shares soared, rising greater than 140 percent this 12 months, boosting the value of the former president’s holdings.
In the case of Truth Social, the merger will allow the social media site to expand its “sphere of free speech and vigorous debate in a time of unprecedented censorship by Big Tech and the government itself,” a Trump Media spokeswoman said.
Trump Media, based in Sarasota, Florida, was created in an almost unbelievable way. In early 2021, two former contestants of his old reality show “The Apprentice,” Andy Litinsky and Wes Moss, hatched a plan to create a conservative media giant centered around Trump after he was banned from what was then called Twitter in the wake of the Jan. 6 attack on the U.S. Capitol .
Trump liked the idea and an agreement was signed just a number of weeks later. Litinsky and Moss will provide consulting services to the recent entity, called Trump Media, and Trump will lend his brand and support to it, taking a majority stake in return.
Truth Social, which has turn out to be Trump’s essential megaphone for pillorying his critics and political opponents, launched in 2022 as a part of Trump Media. The company signed a licensing agreement with Trump early on to make sure that he would post on Truth Social and never other platforms.
From the starting, the goal was to take Trump Media public through a merger with a special purpose acquisition company, or SPAC. The sole purpose of such firms is to lift money from investors and merge with an operating company, which then becomes a listed entity.
Digital World, a SPAC led by Florida businessman Patrick Orlando, went public in September 2021 and raised $300 million from investors. The following month, it announced a merger with Trump Media, but shortly thereafter it was discovered that Orlando and Trump Media officials had entered into deal talks months before Digital World’s initial public offering. Securities laws prohibit SPACs from engaging in significant merger talks before going public.
The Securities and Exchange Commission launched an investigation into these conversations, and Digital World later agreed to pay an $18 million penalty to the regulator, allowing the transaction to proceed.
A February lawsuit filed by Litinsky and Moss, who claimed Trump Media was trying to cut back their stake, also threatened to delay the merger until the judge presiding over the case indicated he would allow the deal to proceed until the dispute was resolved.
Beyond the direct personal advantages to Mr. Trump, the biggest query now facing Trump Media is the way forward for its business and what it plans to do with the $300 million that shall be transferred from Digital World if the merger is approved.
The deal advantages not only Trump, but additionally Truth Social and Trump Media, which have exhausted most of their available funds. Truth Social stays a relative minnow in the social media world in comparison with much larger platforms resembling X (formerly Twitter) and Meta’s Facebook, Instagram and Threads. According to Sensor Tower, a knowledge provider, about 10 million people have downloaded the Truth Social app up to now – all in the United States.
