Investors approved plans to take Donald Trump’s social media platform public on Friday, netting the former president a paper fortune of $3bn.
Trump Media & Technology, the firm behind his minnow social network Truth Social, has spent years fighting to land on the stock market via a so-called “blank check” merger with a shell company. It finally succeeded on Friday morning, following a vote of shareholders in Digital World Acquisition, the vehicle with which Trump’s business has sought to combine.
While Trump Media has struggled since Truth Social’s lackluster launch, generating sales of only about $5m since 2021, Trump’s supporters banded together to boost shares in Digital World. The stock has rallied by some 145% since the turn of the year, boosting the firm’s value to about $6bn. The company will now trade on the stock market as Trump Media & Technology Group under the stock ticker “DJT” – Trump’s initials.
Ahead of the announcement, Digital World’s stock price was $44, suggesting the new company will debut with a value of more than $5bn. Trump’s holding in the combined business is listed at 79m shares, leaving him with a stake of about $3bn on paper. He will not be able to cash in this stake straight away, however, as key shareholders in the company are unable to sell stock for six months after the merger.
It comes amid a financial crunch for Trump, who is vying to regain the presidency from Joe Biden in November’s elections. He was ordered by a New York judge last month to pay $454m following a civil fraud case, something his lawyers warned this week was a “practical impossibility” after 30 surety companies turned him down.
Digital World has increasingly been seen as a so-called meme stock, boosted by internet memes – posted, in its case, on platforms including Truth Social – urging retail investors to buy into it.
The shell company first announced plans to combine with Trump’s digital media firm in 2021, but has grappled with a series of legal hurdles. Special purpose acquisition companies, or Spacs, such as Digital World raise money from investors through initial public offerings, before typically searching for a company to take public.
Once a Spac finds and agrees terms with a target, it absorbs the business and draws it onto the stock market, enabling investors in both companies to take a slide. Should the Spac’s original investors not like the deal, however, they can withdraw their cash.
Julian Klymochko, founder and CEO of a Spac-focused fund at Accelerate Financial Technologies, said Digital World’s price rise was “not due to the underlying fundamentals”.
Truth Social “hasn’t really taken off”, Klymochko said. “At this point, it’s a meme stock. It’s really just a betting tool on the probability of Trump winning the election.”