Truth, Donald Trump’s social networking platform, has a complicated contract. Next week, Social Public will take a critical test that might determine whether it becomes the multibillion-dollar business that the former US president once promised would take on “big tech” or whether it merely squanders its money and rots in the ground.
According to the terms of the agreement, which was made public in October 2021, Trump’s Trump Media & Technology Group and Digital World Acquisition Corp, often known as Spac, were going to merge.
However, Digital World’s shareholders are now being urged to grant the business an additional year to complete the transaction. At a meeting on September 8th, if they choose not to do this, the firm may never grow into the $1.7 billion company it previously envisioned.
The way to tech wealth The proposed agreement has not been easy for Trump and his supporters.
This week, Jay Ritter, a professor of finance at the University of Florida, told the Washington Post that the merger has “basically been unprecedented in terms of all the glitches.” A spokeswoman for Trump Media, Shannon Devine, said that The Post had posted “a heaping pile of bias” after the publication of a thorough analysis of the platform’s current position.
There were claims that negotiations between Digital World and Trump Media had occurred before they were allowed to do so under Spac guidelines shortly after the merger deal was made public.
The board of Digital World removed Patrick Orlando as CEO in March, and a former board member was charged with insider trading.
Five different extensions have already been made to the deadline for finalising the deal. The tech-focused Nasdaq stock market has warned Digital World that its shares may be delisted due to a reporting problem.
Before a tentative $18 million settlement with the Securities and Exchange Commission on accusations of accounting fraud in July, shares of Digital World rose 93%.
In order to save DWAC from being dissolved, the firm and Trump Media asked investors to vote for an extension last month.
In the message, it was stated, “If you are a DWAC stockholder who believes in Truth Social’s mission to reopen the Internet and give people their voices back, we strongly urge you to vote TODAY,” according to Bloomberg.
However, Trump Media has attributed the deal’s delays to authorities. It claimed to the Washington Post last year that the SEC was trying to “sabotage” the merger by sending “the matter into a bureaucratic black hole of inaction” and going against its own mission.
The $300 million that Digital World raised will have to be liquidated and returned if shareholders reject a request for an extension, leaving Trump’s Trump Media & Technology Group with nothing from the deal.
When the offer was announced, US stock investors were still excited about the possibility that Spac deals were a simpler way to float companies than conventional IPOs, which impose greater financial disclosure requirements.
Love of blank checks However, gaps quickly cooled. There were hundreds of them at their height in early 2021. Regulators soon tightened the rules, which caused investors to flee and caused a sharp decline in the number of closed deals.
But at one point, Digital World investors were really interested in the Trump partnership. When the transaction was announced, shares of Digital World jumped to $175. Friday saw them at $16.51.
Trump himself had an idea for a social media business that would “stand up to the tyranny of big tech,” in his words.
However, there have been indications lately that even Trump may be getting bored with his own social media antics. Truth Social has an estimated 2 million members, which is a small number when compared to the 2.9 billion users of Facebook, the 2.5 billion users of YouTube, the 2 billion users of WhatsApp, the 2 billion users of Instagram, and the 541 million users of X, formerly known as Twitter.
Joshua Tucker, co-director of the NYU Centre for Social Media and Politics, told the Guardian when Truth Social first started that one of the company’s issues was that it lacked “network effects” because it excluded a significant portion of the political spectrum.
They began with one hand restrained behind their backs because they targeted the Maga segment of the populace, Tucker explained. “Even without the launch and rollout issues, it’s a hard sell.”
Trump recently made the decision to return to X and upload his now-famous jail photo from the Georgia elections case. There is nothing that even comes close, he wrote last week, insisting that Truth Social was still his social media “home.”