NEW YORK (AP) – Donald Trump is returning to the stock market, and the former president will reap a significant profit in the process.
Shareholders of Digital World Acquisition Corp., a publicly traded shell company, approved merger transaction with Trump’s media business on Friday’s vote. It stands for Trump Media & Technology Group, whose flagship product is the social networking site A social truthwill soon begin trading on the Nasdaq stock market.
Trump is set to own the majority of the combined company — or nearly 79 million shares. Multiply that by Digital World’s closing share price on Friday of $36.94, and the total value of his stake could be close to $3 billion.
The green light comes as the presumptive Republican presidential nominee faces his most expensive legal battle to date: $454 million judgment in a fraud case.
But Trump won’t be able to to redeem immediate profit on the deal unless the company’s board makes changes to the “lock-up” provision that prevents company insiders from selling newly issued shares for six months.
Trump’s presidential campaign did not immediately respond to a 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 after the combination is approved by shareholders. If the recent activity in Digital World’s stock is any indication, Trump Media shareholders may find themselves in a mixed bag.
Many of the investors in Digital World are small investors who are either Trump fans or trying to cash in on the craze instead of large institutional and professional investors. Those shareholders have helped the stock more than double this year in anticipation of the merger. But on Friday, the stock lost nearly 14%.
The Truth Social account for former President Donald Trump is seen on a mobile device, Wednesday, March 20, 2024, in New York. (AP Photo/John Minchillo)
Trump’s earlier foray into the stock market didn’t end well. Trump Hotels and Casino Resorts went public in 1995 under the ticker symbol DJT — the same symbol that 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 facing its investors, as well as those of owner Truth Social, after Trump Media also goes public.
One risk, the company said, is that Trump would have the right to vote in his own interest as a controlling shareholder — which may not always be in the interest of all shareholders. Digital World also cited the high failure rate for new social media platforms, as well as Trump Media’s expectation that it will lose money from 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 plans to merge in October 2021. In addition to a federal probethe deal faced a series of lawsuits leading up to Friday’s vote.
A social truth launched in February 2022one year after Trump banned from major social platforms including Facebook and Twitter, the platform now known as X, following the January 6 uprising at the US Capitol. He has since been reinstated in both, but has remained with Truth Social as a megaphone for his message.
Trump promoted Truth Social in a post on the social media network Thursday night, saying, “TRUTH SOCIAL IS MY VOICE AND THE REAL VOICE OF AMERICA!!! MAGA2024!!!”
Trump Media has not yet disclosed the user numbers of Truth Social. But research firm Similarweb estimates it had roughly 5 million active mobile and web users in February. That’s far below TikTok’s more than 2 billion and Facebook’s 3 billion — but still higher than other “alt-tech” competitors like Parler, which was offline for nearly a year but is planning a comeback, or Gettr, which had fewer than 2 million visitors in February.
The plunge into the public market means Trump’s social media business will soon have to disclose more details.
Private companies are accountable to their owners, while public companies are accountable to the shareholders who own the company’s stock. Once it goes public, Trump Media will have to report its quarterly financials and other material news to federal regulators.
In this sense, Truth Social faces some of the same issues that X struggles with – mass advertisers who don’t want to be related to hate speech and other controversial content.
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Associated Press writers Stan Chow in New York and Barbara Ortutai in San Francisco contributed to this report.