Former U.S. President Donald Trump’s social media venture, Truth Social, is poised for a significant financial boost after investors approved a merger valued at approximately $5.7 billion. On Friday, shareholders of Digital World Acquisition Corp, a special purpose acquisition company (SPAC), voted in favor of merging with Trump Media & Technology Group (TMTG), the parent company of Truth Social. The approval brings Trump closer to realizing substantial financial gains from his stake in TMTG, estimated at around $3.3 billion. The merger is set to provide TMTG with a vital cash infusion of $300 million, crucial for the platform’s expansion amid competitive pressures in the social media landscape. Truth Social reported operating losses of $10.6 million in the first nine months of 2023, with revenues of $3.4 million. The company has been sustaining operations through convertible promissory notes totaling $40.7 million. The deal’s approval is particularly significant as it comes at a time when Trump faces various legal and financial challenges, including a $454 million judgment in a civil fraud case in New York. The successful merger could bolster his resources as he navigates these complexities. Despite the positive vote, Digital World’s shares experienced a decline of over 10% following the announcement. The fully diluted valuation of the combined entity could reach up to $8.6 billion, which, while substantial, is less than half the valuation of Elon Musk’s social media company, X (formerly Twitter). Truth Social, launched as an alternative platform for Trump’s supporters after his removal from major social media sites, reportedly has 8.9 million sign-ups. In contrast, X boasts over half a billion monthly users. Trump currently has 6.7 million followers on Truth Social compared to 87.4 million followers on X. The merger reflects the ongoing interest in alternative social media platforms and highlights the challenges new entrants face in competing with established giants. Investors and market analysts will be closely watching how TMTG leverages this new funding to enhance its platform and attract a broader user base. TMTG was founded with the assistance of former contestants from Trump’s reality TV show “The Apprentice,” aiming to provide a platform for free expression and to connect with supporters globally.
Reference(s):
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