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NEW YORK (AP) — donald trump is returning to the stock market, and the former president may get a hefty payday in the process.
Shareholders of Digital World Acquisition Corp., a publicly traded shell company, approved an agreement to merge with Trump’s media business in a Friday vote. That means Trump Media & Technology Group, whose flagship product is the social media site. Social Truthwill soon begin trading on the Nasdaq stock market.
Trump will own the majority of the combined company, or nearly 79 million shares. Multiply that by Digital World’s closing stock price on Friday of $36.94 and the total value of your stake could be nearly $3 billion.
The green light comes as the presumptive Republican presidential nominee faces his most costly legal battle to date: a $454 million judgment in a fraud lawsuit.
But Trump won’t be able to withdrawals The windfall from the deal will be immediate, unless the company’s board makes changes to a “lock-up” provision that prevents company insiders from selling newly issued shares for six months.
Trump’s presidential campaign did not immediately respond to a request for comment.
When a publicly traded shell company agrees to buy a private company, the target company takes its place on a stock exchange once shareholders approve the combination. If recent activity in Digital World stock is any indication, Trump Media shareholders could be in for a bumpy ride.
Many of Digital World’s investors are small investors who are Trump fans or trying to cash in on the mania, rather than large institutional and professional investors. Those shareholders helped the stock double this year in anticipation of the merger going through. But on Friday the shares lost almost 14%.
Former President Donald Trump’s Truth Social account is seen on a mobile device, Wednesday, March 20, 2024, in New York. (AP Photo/John Minchillo)
Trump’s previous foray into the stock market did not end well. Trump Hotels and Casino Resorts went public in 1995 under the symbol DJT, the same symbol under which Trump Media will trade. In 2004, Trump’s casino company had declared bankruptcy and was delisted from the New York Stock Exchange.
Ahead of Friday’s approval, Digital World’s regulatory filings listed many of the risks facing its investors, as well as those of Truth Social’s owner once Trump Media also goes public.
One risk, the company said, is that Trump has the right to vote in his own interest as a majority shareholder, which may not always be in the interest of all shareholders. Digital World also cited the high failure rate of new social media platforms, as well as Trump Media’s expectation that it would lose money on its operations “for the foreseeable future.”
Trump Media lost $49 million in the first nine months of last year, when it earned just $3.4 million in revenue and had to pay $37.7 million in interest expense.
DWA shareholders also voted Friday to approve a slate of seven people, including the former president’s son, Donald Trump Jr., to fill positions on Trump Media’s board of directors. The others include former Republican Rep. Devin Nunes, who would also be the company’s CEO; Robert Lighthizer, who served as Trump’s U.S. trade representative; Linda McMahon, who led the Small Business Administration during Trump’s presidency; and Kashyap “Kash” Patel, White House national security assistant during the Trump administration.
Trump Media and Digital World first announced their merger plans in October 2021. In addition to a federal investigationThe agreement faced a series of lawsuits before Friday’s vote.
Social Truth launched in February 2022a year after Trump was banned from major social platforms including Facebook and Twitter, the platform now known as X, following the January 6 insurrection at the US Capitol. He has since been reinstated to both, but has stuck with Truth Social as a megaphone for his message.
Trump promoted Truth Social in a social media post Thursday night, saying, “TRUTH SOCIAL IS MY VOICE AND THE TRUE VOICE OF AMERICA!!! “MAGA2024!!!”
Trump Media has so far not revealed the number of Truth Social users. But research firm Similarweb estimates it had about 5 million active web and mobile users in February. That’s well below TikTok’s more than 2 billion and Facebook’s 3 billion, but still more than other “alt-tech” rivals like Parler, which has been offline for almost a year but is planning a comeback, or Gettr, which had fewer than 2 million visitors in February.
A drop in the public market means Trump’s social media business will soon have to reveal more details.
Private companies are responsible to their owners, while public companies are responsible to the shareholders who own the company’s shares. Once public, Trump Media will be required to report its quarterly financials, as well as other major news, to federal regulators.
In this sense, Truth Social faces some of the same problems that X has been facing: conventional advertisers who doesn’t want to be associated with hate speech and other controversial content.
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Associated Press writers Stan Choe in New York and Barbara Ortutay in San Francisco contributed to this report.