On Friday, a significant advancement occurred for former U.S. President Donald Trump‘s financial prospects, as investors in a blank-check acquisition company, Digital World Acquisition Corp (DWAC), endorsed a merger with Trump Media & Technology Group (TMTG).
This approval positions Trump to potentially gain from a valuation of approximately $5.7 billion.
The merger notably boosts the valuation of Trump’s stake in the company, which oversees the social media app Truth Social, to an estimated $3.3 billion.
This development comes at a critical time for Trump, who is navigating financial challenges stemming from various legal entanglements, including a notable $454 million judgment in a civil fraud case in New York.
Despite shareholder endorsement, the merger’s completion, expected next week, faces uncertainties, notably lawsuits filed by Digital World’s former CEO Patrick Orlando and Trump’s previous business collaborators, Andy Litinsky and Wes Moss.
They seek additional shares for their contributions to the deal, though the resolution to these legal disputes remains uncertain.
Moreover, Trump has agreed not to sell his shares in the merged entity for six months or leverage them for loans.
The merger is poised to inject $300 million into TMTG, offering a lifeline to Truth Social, which reported a $10.6 million operational loss in the first nine months of 2023, despite modest revenues.
TMTG has been financially supported through $40.7 million in loans convertible to stock.
Digital World’s share value has surged since announcing its merger with TMTG, largely propelled by Trump’s supporters and retail investors.
However, shares fell over 10% following the recent shareholder approval.
Despite this, the enthusiasm among Trump’s base remains high, with Truth Social users advocating for stock purchases to support Trump.
Comparatively, TMTG’s valuation and Trump’s social media following are juxtaposed against Elon Musk’s significantly larger user base on X (formerly Twitter), highlighting the competitive landscape of social media platforms.
The merger also underscores Trump’s ownership stake in the combined company, which varies based on investor support, and revisits TMTG’s origins and Trump’s ambition to re-establish his social media presence following his ban from major platforms after the Capitol attack on January 6, 2021.
Since its announcement, the deal has encountered numerous hurdles, including scrutiny from the U.S. Department of Justice and the SEC, leading to a shake-up in Digital World’s leadership and an $18 million settlement with the SEC over misleading investors.
Trump continues to use Truth Social as his primary communication platform, emphasizing his continued engagement with his supporter base amidst ongoing legal and regulatory challenges.