Trump Media & Technology Group: Navigating Financial Challenges with a Potential Multi-Billion Dollar Windfall

 Former President Donald Trump is on the brink of a significant financial gain, potentially worth billions, at a time when he’s under considerable financial and legal strain. Trump Media & Technology Group, the parent company of Trump’s underperforming social media platform, Truth Social, is poised to go public as early as next week, overcoming years of legal and regulatory hurdles. If shareholders approve the merger of Trump Media with a special purpose acquisition company (SPAC) this Friday, Trump could become the majority stakeholder in a publicly-traded company, with shares valued at over $3 billion based on current market rates.

 However, industry experts suggest that there are several practical, financial, and legal factors that make it unlikely for this deal to alleviate Trump’s impending financial crunch, even if it gets approved. Matthew Kennedy, a senior IPO market strategist at Renaissance Capital, stated, “President Trump won’t be able to cash in on that stake immediately.” Trump is up against a Monday deadline to post a $464 million bond in a civil fraud case against him in New York.

 If he fails to do so, the state’s attorney general could attempt to seize his golf course and private estate north of Manhattan, among other assets. The silver lining for Trump is the strong incentives for shareholders to greenlight the merger with Digital World Acquisition Corp. If approved, Trump could hold a minimum of 58.1% stake, as per the filings. The merger agreement stipulates that Trump would own approximately 79 million shares of the new public company, and potentially millions more if certain targets are met. 

With Digital World’s current share price hovering around $43, that substantial stake could be worth $3.4 billion, at least on paper. The merger could be finalized swiftly. Regulatory filings suggest that the companies aim to close the merger two business days post the shareholder vote approval. This could pave the way for trading under the new name and ticker symbol by Tuesday or Wednesday, although it might take longer, according to Kennedy. However, this stake is not as liquid as it appears. Converting these paper gains into actual cash could pose a significant challenge for Trump. 

In fact, Trump’s shares in this company could be even less liquid than his real estate assets, as per Charles Whitehead, a law professor at Cornell Law School. Firstly, experts believe that the market is grossly overvaluing Trump Media based on the company’s fundamentals. This could make it difficult for Trump to offload the stock or use it as collateral. Yale law professor Jonathan Macey commented, “The stock price is clearly a bubble. No rational investor would accept the stock at face value, especially if they had to hold it for any length of time.” SEC filings reveal that Trump Media’s revenue was a mere $1.1 million in the third quarter, with the company reporting a loss of $26 million during the same period. Moreover, Truth Social’s user base appears to be dwindling. 

The number of Truth Social’s US monthly active users on iOS and Android has decreased by 39% year-over-year, according to data from Similarweb. Truth Social remains significantly smaller than X (formerly Twitter), which is also experiencing a decline, albeit at a slower rate. Jay Ritter, a finance professor at the University of Florida, stated that the current market price is difficult, if not impossible, to justify. “It is grossly overvalued,” said Ritter.

 “It qualifies as a meme stock for which the price is divorced from fundamental value…Meme stock investors are usually buying on the basis of the greater fool theory of investing: It is overvalued today, but I hope to make money selling it to an even greater fool tomorrow at an even higher price.” However, even if Trump were to find a buyer for those shares, experts suggest that he is likely not permitted to sell or pledge that stock immediately.
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