By customary investment rules, Trump Media & Technology Group (DJT) should still be privately held. For one, Digital World Acquisition Co., the public company that merged with Trump Media on March 26, had previously hit rocks that would have sunk any other ship. DWAC on several occasions had postponed its scheduled purchase of Trump Media, had been fined $18 million by the SEC and been forced to restate its previous filings, had lost its institutional investors and changed its accounting firm.
Digital World Acquisition Co., the public company that merged with Trump Media on March 26, had previously hit rocks that would have sunk any other ship.
Under normal conditions, DWAC would have ceased to exist. Shareholders in special purpose acquisition companies, as DWAC was structured, have the right to demand the return of their initial investment until that company consummates a deal. (That is what DWAC’s institutional investors did.) Retail investors surely would have treated DWAC similarly, had not its target carried the name Trump.
The news became stranger yet on March 26 when, against the tide, the merger proceeded, permitting Trump Media to become publicly listed. The stock’s closing price of $57.99 valued the company at roughly $9 billion. (Don’t believe any authoritative statement about Trump Media’s stock-market value, because nobody knows what it is due to the company’s complex stock issuance structure.) However, by any rules previously known to mankind, that amount far surpassed what the stock could bear.
Let me explain: In 2023, Trump Media received $4.1 million in revenues. Most news accounts of Trump Media’s financial report emphasized the company’s $58 million loss that year, but that amount of red ink, by itself, isn’t the problem. There’s nothing amiss with losing money to make money. The problem for Trump Media is that its sole operation, Truth Social, is highly unlikely to ever make money. Not only were its annual sales paltry — only…
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