Former President Donald Trump is on the brink of a significant financial breakthrough despite facing legal and economic challenges.
This development comes as Trump Media & Technology Group, the entity behind the Truth Social platform, prepares to go public, potentially as early as next week. This move could mark a turning point for Trump, who is currently embroiled in many legal battles and financial obligations.
Shareholders of Digital World Acquisition Corp (DWAC) have recently voted in favor of a merger with Trump Media & Technology Group on Friday, March 15, 2024. This merger is pivotal as it could elevate the value of Trump’s shares to over $3 billion, based on the current market prices. However, this potential windfall is clouded by significant legal and financial uncertainties.
Trump’s immediate financial concerns include a looming Monday deadline to post a $464 million bond in a civil fraud case in New York. Failure to meet this deadline could result in severe repercussions, including the seizure of assets such as his golf course and private estate north of Manhattan. The case highlights the pressing cash crunch situation facing Trump which contrasts sharply with the projected value of his stock after the merger.
The merger, contingent on shareholder approval, promises to grant Trump a majority stake in the public company. Regulatory filings suggest that Trump could own more or less 79 million shares, translating to a dominant stake of at least 58.1% in the merged entity. The anticipation of the merger has already influenced market activity, with Digital World shares increasing by 3% in premarket trading.
Despite the optimistic projections, experts caution against assuming immediate financial relief for Trump. Though potentially valuable on paper, the shares have restrictions that significantly limit their liquidity. These include a lock-up period that prevents immediate stock selling, further complicated by additional charter provisions restricting financial maneuvering.
Critics argue that Trump Media & Technology Group’s valuation is grossly inflated and detached from the company’s actual financial performance. The company reported a loss of $26 million in the third quarter, with revenues barely crossing the $1 million mark. Furthermore, Truth Social’s user base has declined, raising questions about the platform’s viability and long-term prospects. The stock’s speculative nature, categorized by some as a “meme stock,” suggests that its current valuation may not be sustainable. This situation presents a precarious scenario for Trump, who, despite the potential for substantial paper wealth, faces significant hurdles in translating it into tangible financial resources.