Donald Trump is in the process of acquiring significant funds potentially through the stock market to cover a $464 million fraud penalty. Trump Media, which operates the Truth Social platform, is set to go public after Digital World Acquisition Corp’s shareholders voted to proceed with the acquisition.
Trump is expected to hold at least a 58% stake in the merged entity, valued at approximately $3 billion based on Digital World’s current share price.
This development comes as a significant boon for Trump, particularly when considering the auditor’s previous warnings about the business’s risk of failure and various legal challenges it faces, including an $18m fraud settlement related to the merger’s formation.
Shares in Digital World surged prior to the vote, indicating strong support from individual investors, many of whom are Trump supporters. Digital World, a SPAC created specifically to acquire other companies for public listing, will be rebranded as Trump Media & Technology Group and plans to list on the Nasdaq under the ticker DJT soon.
However, this financial maneuver is unlikely to immediately alleviate Trump’s pressing financial burdens, such as the New York fraud penalty, due to restrictions on share sales for at least six months, though exceptions could be made.
Despite these hurdles, Trump’s supporters, like Chad Nedohin (Captain DWAC), remain hopeful that their investment can aid Trump, especially in his legal challenges. Nonetheless, the investment carries substantial risk, with analysts pointing out the inflated valuation of Trump Media compared to its modest revenue and significant losses.
The merger promises over $200 million in cash to Trump Media for potential growth, yet Truth Social’s market presence remains limited compared to major social media platforms. Analysts categorize Digital World as a “meme stock,” suggesting its share price may not reflect the company’s fundamentals and predicting a likely eventual decline.
Despite the speculation, Trump, mainly contributing his name and presence on the platform, stands to gain significantly, highlighting a substantial transfer of wealth from investors to himself.
