Donald Trump is set to receive a windfall from a merger involving his social media company, but it won’t come in time to solve his pressing financial needs — and selling later might diminish the value of the company, for good measure.
On Friday, shareholders with Digital World Acquisition Company approved a merger with Trump Media & Technology Group, the parent company of Trump’s struggling social media platform Truth Social, essentially a far-right copycat of the site formerly known as Twitter whose main draw is Trump’s own account. The deal will allow the company to trade on the stock market under the ticker “DJT,” for Trump’s initials.
The merger is great for Trump, although it’s hard to justify using any kind of normal business logic.
In a nutshell: Trump launched a mediocre social media company as a majority owner. Then, an investment group with a history of disclosure issues merged with this company, presumably giving it access to its funds. That’s jacked up the value of Trump’s media company and, consequently, the net worth of its primary investor, Donald Trump, who holds approximately a 60% stake. Early reports suggest the deal could make Trump — on paper — worth around another $3 billion.
Trump could really use the money right now, since he’s been unable to raise the money to pay off the $454 million judgment he owes after losing his civil fraud case in New York.
But, unfortunately for him, he can’t get it just yet. Due to what’s called a “lock-up” provision — a rule that prevents stockholders from selling stock for a period of time after their companies go public — Trump won’t be able to withdraw any capital for six months unless he’s given some sort of waiver.
And even if Trump were to get that waiver, the prospect of him selling all his shares could diminish the value of the company he just formed with DWAC, as Vaughn Hillyard explained on MSNBC Friday. (Though one wonders if Trump may try to use the new deal as…
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