Trump says ‘I love Truth Social’ one day after DWAC stock plunges on social media merger vote
Jonathan Raa | Nurphoto | Getty Images
“I LOVE TRUTH SOCIAL,” declared Donald Trump to his extensive online following this Saturday. However, stockholders of the freshly consolidated company that operates the social media application may be nursing a sense of regret following a stark price decrease the previous day.
Digital World Acquisition Corp., a shell firm, experienced a nearly 14% drop in its share price in the hours after shareholders approved a merger with the ex-president’s social media enterprise to make it public this Friday.
If this downtrend picks up speed in the upcoming weeks, Trump’s dominant stake in the recently merged company, now known as Trump Media, may fall below the $3 billion pre-merger estimation.
Its stock, which DWAC saw soar to a one-year peak of $58.72 per share on January 23 as the long-delayed merger seemed increasingly likely, had slumped to $44.20 per share when trading started early Friday morning, just before the shareholder vote.
By Friday afternoon, DWAC’s shares closed at $36.94 per share, yet recovered slightly in after-hours trading to $38.55 per share. However, this was still a 12.7% down from Friday’s opening price.
The shares’ decline may be attributed to doubts about whether Trump Media & Technology Group, now merging with DWAC, can generate substantial revenue. Concerns also loom about whether Trump might decide to liquidate his share early due to his various legal difficulties.
TMTG, the proprietor of the Trump Social platform that Trump praised this Saturday, recorded nearly $50 million in losses in the first three quarters of 2023, making less than $3.5 million in revenue during the same period.
Meanwhile, Trump is currently facing civil legal rulings amounting to more than half a billion dollars in federal and state courts in New York, as well as escalating legal costs from those lawsuits and four criminal prosecutions as he aims to take over from President Joe Biden in the upcoming November election.
Last week, Trump’s attorneys stated in a court document that he is presently unable to secure an appeal bond to cover a $454 million fraud judgment in one of these cases, temporarily preventing the New York Attorney General’s Office from seizing that award.
By the terms of the merger, Trump, who will possess at least a 58% stake in Trump Media, is prevented from selling shares in the company for a period of six months.
Nevertheless, the new board of directors, which will likely comprise Donald Trump Jr. and other close affiliates, could vote to eliminate this restriction, enabling Trump to divest his shares earlier to cater for his legal expenses.
This move could potentially trigger a decrease in Trump Media’s share price, causing other shareholders to unload stock, further pushing down share prices.
Upon its launch on the NASDAQ stock market, projected for next week, Trump Media will trade under the symbol DJT. This is the same ticker used for Trump’s previous public company, Trump Hotels & Casino Resorts, which traded on the New York Stock Exchange starting in 1995.
That firm, which filed for bankruptcy protection in 2004 the same year it was delisted from the exchange, consistently operated at a loss throughout its existence.
