NEW YORK (AP) — Donald Trump is returning to the stock market, and the former president stands to reap a sizeable payout in the process.
Shareholders of Digital World Acquisition Corp., a publicly traded shell company, approved a deal to merge with the Trump’s media business in a Friday vote. That means Trump Media & Technology Group, whose flagship product is social networking site Truth Social, will soon begin trading on the Nasdaq stock market.
Trump is set to own most of the combined company — or nearly 79 million shares. Multiply that by Digital World’s closing stock price Thursday of $42.81, and the total value of his stake could surpass $3 billion.
The greenlight arrives at a time the presumptive Republican presidential nominee is facing his most costly legal battle to date: a $454 million judgment in a fraud lawsuit.
But Trump won’t be able to cash out the deal’s windfall immediately, 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 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 the combination is approved by shareholders. If recent activity in Digital World’s stock is any indication, shareholders of Trump Media could be in for a bumpy ride.
Many of Digital World’s investors are small-time investors who are either fans of Trump or trying to cash in on the mania, instead of big institutional and professional investors. Those shareholders helped the stock more than double this year in anticipation of the merger going through. After the deal was cleared Friday, shares fell as much as 12% before bouncing back to be down about 2.5% around midday.
Trump’s earlier foray into the stock market didn’t end well. Trump Hotels and Casino Resorts went public in 1995 under the symbol DJT — the same symbol Trump Media will trade under. By 2004, Trump’s casino company had filed for bankruptcy protection and was delisted from the New York Stock Exchange.
Ahead of Friday’s approval, Digital World’s regulatory filings listed many of the risks its investors face, as well as those of the Truth Social owner once Trump Media also goes public.
One risk, the company said, is that Trump would be entitled to vote in his own interest as a controlling stockholder — which may not always be in the interests of all shareholders. Digital World also cited the high rate of failure for 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 brought in just $3.4 million in revenue and had to pay $37.7 million in interest expenses.
Trump Media and Digital World first announced their merger plans back in October 2021. In addition to a federal probe, the deal faced a series of lawsuits leading up to Friday’s vote.
Truth Social started in February 2022, 12 months after Trump was prohibited from major social platforms such as Facebook and Twitter, the platform now referred to as X, after the Jan. 6 insurrection at the U.S. Capitol. He has since been reinstated to both, but has remained with Truth Social as a platform for his message. Trump endorsed Truth Social in a post on the social networking site Thursday evening, stating: “TRUTH SOCIAL IS MY VOICE, AND THE REAL VOICE OF AMERICA!!! MAGA2024!!!”
Trump Media has not yet revealed Truth Social’s user numbers. However, research firm Similarweb estimates that it had approximately 5 million active mobile and web users in February. This is much lower than TikTok’s over 2 billion and Facebook’s 3 billion but still higher than other “alt-tech” competitors like Parler, which
has been offline for almost a year but is planning a comeback, or Gettr, which had less than 2 million visitors in February. A move into the public market means Trump’s social media business will soon have to disclose more details.
Private companies are responsible to their owners, while public ones are responsible to the shareholders who own the company’s stock. Once public, Trump Media will be obliged to report its quarterly finances as well as other important news to federal regulators.
In this manner, Truth Social confronts some of the same issues that X has been dealing with —
mainstream advertisers who do not wish to be connected with hate speech and other contentious content. Shareholders of Digital World Acquisition Corp., a publicly traded shell company, authorized a deal to merge with the former president’s media business in a Friday vote.
