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Trump’s Truth Social merger could throw him a much-needed cash lifeline
Insights from The New York Times, The Wall Street Journal, and Vanity Fair
The News
Donald Trump’s social media firm — the parent of Truth Social — merged with a shell company on Friday, a deal that raised the former U.S. president’s on-paper wealth by $3 billion and could give him a much-needed cash infusion as he struggles to pay mounting legal bills.
Investors in the shell company Digital World Acquisition will now also be shareholders in Trump Media & Technology Group, which owns Trump’s social media platform, Truth Social. The deal will also transfer $300 million to Trump Media to help the low-on-cash company keep Truth Social running.
Shares of the newly combined company could begin to be publicly traded as soon as Monday. They’ll be sold under the stock symbol DJT, Trump’s initials.
SIGNALS
Stock’s appeal seen as more political than financial
The Wall Street Journal called the deal “as stunning as it is unusual.” Since its founding in 2021, Trump Media has had a disappointing financial performance, failing to make money from advertising on Truth Social.
But tens of thousands of traders seem to have bought into the idea that this stock should be tied to Trump as a political figure, not the company’s finances. Shares of Digital World Acquisition have soared 111% in the year to date. Vanity Fair put it like this: “Trump’s financial future now hinges on some of the strangest fads in corporate finance—meme stocks, [shell company] deals, and cult-of-personality investing,” while one analyst told the WSJ that the investor behavior was “more of a political statement and a quasi betting tool on the election.”
Trump’s possible windfall comes at a ‘critical time’
The merger agreement stipulates that Trump must hold his shares for six months, but The New York Times reported it’s possible that the company’s board — which is largely made of Trump allies — will waive those lockup restrictions, freeing up a cash lifeline sooner.
The question of whether this will happen comes at a “critical time,” Business Insider reported, as Trump scrambles to pay a more than $450 million penalty in the civil fraud case brought by the New York Attorney General Letitia James. If he doesn’t come up with the money by Monday, the attorney general could begin seizing assets, including some of his properties.
A waiver on cashing out could be a liability for the company
If Trump or other shareholders are given a waiver to sell their shares, investors might worry that they would flood the market, driving down the price — or that they are “cashing out to leave the company because they don’t think well of its prospects,” a University of Georgia law professor told The Washington Post. That could be a liability for the company, The Post reported, because shareholders could argue the waiver “unfairly damaged their financial state.”
Regardless of whether Trump’s six-month wait is waived, stocks bring no guarantees. Even if he doesn’t have to wait to sell shares, the stock price could “change dramatically before Trump has a chance to cash out,” WIRED reported.
