Former U.S. President Donald Trump’s social media venture, Truth Social, has taken a significant step forward after investors approved a $5.7 billion merger deal on Friday. The approval came from shareholders of Digital World Acquisition Corp (DWAC), a special purpose acquisition company (SPAC) planning to take Trump Media & Technology Group (TMTG), the parent company of Truth Social, public through the merger.
The deal not only elevates the valuation of TMTG but also promises a crucial infusion of $300 million in cash, providing much-needed capital for the social media platform. TMTG reported a loss of $10.6 million in the first nine months of 2023, with revenues of $3.4 million, relying heavily on $40.7 million borrowed through convertible promissory notes.
Upon completion of the merger, Trump’s majority stake in TMTG would be valued at approximately $3.3 billion. Depending on various factors, the combined company could reach a valuation of up to $8.6 billion when considering warrants and earnout shares.
Truth Social was launched as an avenue for Trump to communicate with his supporters after major platforms like Facebook, Twitter (now X), and YouTube suspended his accounts following the events of January 6, 2021. Despite having 6.7 million followers on Truth Social, compared to over 88 million on X before his suspension, the platform has seen steady growth, boasting 8.9 million sign-ups as of February.
The merger’s approval signals investor confidence in the potential of Truth Social to carve out its niche in the competitive social media landscape dominated by giants like Elon Musk’s X, which has over half a billion monthly users.
Trump, who has declared his intention to run for the U.S. presidency again, stands to benefit significantly from the deal, potentially bolstering his financial resources amidst various legal challenges, including a $454 million judgment in a civil fraud case in New York.
Digital World’s stock has experienced significant volatility, nearly quadrupling since announcing the merger with TMTG in 2021, though it fell over 10 percent following the recent shareholder approval.
As the merger progresses, it remains to be seen how Truth Social will position itself within the global social media ecosystem and what impact, if any, it may have on social media trends and user engagement in regions beyond the United States, including Asia.
(With input from Reuters)
Reference(s):
cgtn.com
