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With Trump’s net worth having grown by around $400 million since leaving office, or around 4 times the current net value of Trump Media and Technology Group (TMTG), the fate of the battered merger agreement between TMTG and the SPAC Digital World (DWAC) is of scant importance to the former US President in the greater scheme of things, especially as the $1 billion windfall from the deal has all but evaporated. Nonetheless, TMTG’s Truth Social platform can still serve an important purpose should Trump win the US Presidency in 2024, hence the unabated interest in the fate of this marooned merger agreement.
The Complicated Relationship Between Trump Media and Technology Group (TMTG) and the SPAC Digital World
The former US President Trump retains a 90 percent stake in the Trump Media and Technology Group, the entity that controls the Truth Social – a platform that aims to emulate Elon Musk’s X-branded social media behemoth.
Truth Social is often considered Trump’s personal echo chamber, and for good reason. At launch, the platform was targeting an audience of 81 million users by 2026. Today, as we are heading toward the close of 2023, the platform can only boast of around 6.5 million users.
The Truth Social app uses a Soapbox frontend and a customized, open-source version of Mastodon at its backend. In December 2021, the platform tapped the online video platform Rumble to provide video hosting services.
Trump’s media-focused entity is currently slated to go public via a reverse merger with the Special Purpose Acquisition Company (SPAC), Digital World Acquisition Corp. (DWAC). However, the consummation of the merger agreement between the two entities has been facing inordinate delays amid an onslaught of federal investigations related to inappropriate disclosures of the events leading up to the finalization of the agreement. It was only recently that Digital World reached a settlement with the SEC for misleading investors by failing to disclose a number of merger-related preliminary discussions with TMTG as well as other investors in the spring and summer of 2021.
In September 2023, DWAC’s shareholders extended the deadline for consummating the planned merger with TMTG by 1 year. In October 2023, the SPAC returned the remaining $533 million in PIPE investments that were supposed to bolster Truth Social’s finances in the post-merger phase. Initially, these PIPE investments had amounted to over $1 billion, but investors had grown increasingly skittish as the proposed merger between Digital World and Trump Media and Technology Group could not be consummated. Should TMTG still manage to go public via the SPAC route, it will gain only $293 million in cash that DWAC had raised in its IPO.
What’s more, in late September, Digital World and Trump Media and Technology Group entered into a third amendment to their merger agreement, which stipulated the filing of an amended Form S-4 by the 14th of November, another round of due diligence, and the option to terminate the merger agreement by the 21st of November should the due diligence fail. DWAC noted in its pertinent filing with the SEC:
“The Merger Agreement may be terminated by DWAC if the DWAC board of directors, following updated due diligence, no longer believes in good faith that the Merger is in the best interests of DWAC or its stockholders; provided, that such termination right may only be exercised from October 31, 2023, through November 21, 2023.”
This means that TMTG’s deal to go public might fall through by the 21st of November if the two parties decide not to pursue this long-delayed deal.
Truth Social’s Importance For the Former US President
Forbes recently estimated that Trump’s net worth has grown by around $400 million since leaving office, and currently stands at $2.5 billion vs. just $2.1 billion back in 2020. Do note that Bloomberg recently pegged Trump’s net worth at $3.1 billion. This increase comes as some of the former President’s star properties, particularly those in Florida, have proven to be quite resilient to the ongoing real estate malaise in the US.
As per a tabulation by Forbes, Trump Media and Technology Group is currently worth around $96 million, with Trump’s direct stake in the entity worth around $86 million. This means that the social media-focused entity represents less than a quarter of the wealth that the former US President has managed to generate since leaving office.
Moreover, now that Elon Musk has removed the ban on Trump that had prevented him from posting on X, concurrent with Truth Social’s dismal user base, many continue to expect the former President to ditch his personal echo chamber entirely. Such prognostications, however, ignore the value that Trump would be able to drive by posting his thoughts exclusively on Truth Social upon winning the US Presidency. As long as the office of the US President remains in play for Trump, we believe that he will not abandon his pet project. Of course, the increasingly messy merger with Digital World remains an entirely different matter.