Donald Trump wants to become US President again: This is how it is with his SPAC Digital World Acquisition

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• Trump’s social media platform Truth Social online since February
• Trump Media & Technology Group’s IPO faces major stumbling blocks

• Trump’s SPAC Digital World Acquisition Company near the end?

Trump’s announcements in October 2021 were big: Truth Social, his social network, would overshadow Twitter, Facebook & Co. “Unlike the big tech platforms, there will be no shadow banning, no throttling, no demonization and no manipulation of algorithms for political agitation,” Trump’s statement quoted Investor’s Business Daily as saying. “We will not treat users like social experiment lab rats or label alternative views as ‘disinformation,'” the 76-year-old ex-president said. So far, however, little has come of these far-reaching plans – although Trump’s platform Truth Social actually went online, the number of users in the self-proclaimed “America’s big tent” is kept within narrow limits. Users from Germany still have no access to this social network nine months after its launch. Trump himself currently has 4 million followers on Truth Social – on Twitter it was more than 89 million before he was blocked. Is Trump’s dream of his own social media ecosystem already over?

Trump wants his technology company to go public

Trump plans to list his company Trump Media & Technology Group (TMTG) on the NASDAQ technology exchange through SPAC (Special Purpose Acquisition Company) Digital World Acquisition. A SPAC is a shell company that first sells its shares and uses the funds raised by investors to buy out a private company. Through this merger, the acquired company becomes a publicly traded company. In this way, the initial public offering (IPO) can be significantly shortened, since the lengthy legal examinations otherwise required by American financial law can be avoided.

The crucial question: Will the takeover period be extended?

The catch with Trump’s SPAC: The merger between DWAC and TMTG has not yet been completed because the US Securities and Exchange Commission is investigating against the SPAC. Namely, the circumstances under which DWAC selected the Trump company are the subject of civil and criminal investigations. The SEC has put the transaction on hold due to the ongoing investigation.

For this reason, the takeover period must be extended, which requires a majority of 65 percent of the shareholders. This is the only way to prevent the liquidation of DWAC, since SPACs only have a limited lifetime and are dissolved after a certain time without a merger. This decisive vote has been postponed several times, and DWAC boss Patrick Orlando has set November 23 as the new date. With thousands of retail investors coming in, getting the necessary votes for the postponement is a difficult task to organize.

Trump wants $1.3 billion IPO

DWAC has a $293 million trust fund to fund a campaign to reach shareholders. Overall, TMTG is to go public with an investment volume of 1.3 billion US dollars, according to Trump’s company, investors have promised investments of one billion dollars. In the meantime, however, large amounts of investor money are being lost. In an SEC filing last month, DWAC said it received notices from private investment in public equity (PIPE) investors between Sept. 19 and Sept. 23, totaling approximately $139 million, according to Investor’s Business Daily” reported.

Big chance or mega flop?

DWAC shares are in a protracted bear market after hitting a record high of $175.00 on Oct. 22, 2021. A good year after the all-time high, they reached their previous low of $15.57 – i.e. at the time when Tesla CEO Elon Musk Twitter took over and announced measures to increase the short message platform’s profits. There is also speculation as to whether Trump will soon be allowed back on Twitter. Since Trump’s candidacy for the US presidential election in 2024 has been imminent, the DWAC stocks have jumped up again in the last few trading days – the papers have also risen from the record low with a current price of 21.29 US dollars (as of the closing price of November 16, 2022) can significantly remove.

Should Trump’s company achieve the goals it has set itself, the prices of DWAC and then TMTG could rise significantly further. According to TMTG, it expects the average revenue from Truth Social per user to increase to $13.50 by 2026. By that time, it will have 81 million users, according to the ambitious forecast. In comparison, the average revenue per user on Twitter is currently $23.76. Truth Social should only form part of Trump’s digital cosmos, other components such as a streaming service should be added. By 2026, 40 million paying TMTG+ subscribers are expected. The average monthly fee per user should then be 9 US dollars.

From today’s perspective, however, these forecasts seem extremely optimistic. After about nine months, the first interim conclusion from Truth Social is very sobering. In addition, the merger of DWAC with TMTG is far from dry. With that in mind, there’s a good chance Trump’s digital adventure will only prove to be a flash in the pan.

Editorial office finanzen.net

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