Investors face other risks as well, tied to Mr Trump’s political fortunes and his 2024 presidential campaign. Ahead of the listing on the Nasdaq exchange, Trump Media officials called it a “pivotal moment” for the firm – and the wider media landscape. The deal was delayed by government investigations and other hurdles, but regulators cleared it earlier this year and Digital World shareholders voted in favour last week.
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Whatever is motivating buyers, Mr Trump, whose main contributions to Trump Media have been his name and posts on the platform, appears poised to be the top beneficiary. Ahead of the vote this week, he said there had been less activity, a sign that professional firms might be the ones driving the trading. But even after Friday’s slide, they still imply Trump Media has a value of almost $5bn, which is a lot given it brought in just $3.3m in revenue in the first nine months of last year and lost nearly $50m. The risk that Digital World shareholders will lose money on their investment is significant, according to analysts. Another outstanding question is what role the site might play if Trump decides to run for president again in 2024 and whether it would serve as a big enough megaphone when he no longer has the immediate influence he had on Twitter. Trump’s lawyers in a court filing said he did not have enough cash to offer as collateral to bond companies for a bond that would secure the judgment and prevent James from collecting.
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His former close adviser Jason Miller has since started his own social platform called GETTR. In a statement Wednesday night, Miller said, “Trump has always been a great deal-maker, but we just couldn’t come to terms on a deal.” Miller congratulated Trump on the launch of his company. In response to what he and allies viewed as Big Tech censorship, Trump first teased starting his own social media company back in March. Trump and others have claimed that the major tech platforms try to silence conservative voices — though some, notably the commentator Ben Shapiro, have found huge popularity because of their presence on social media. Trump was banned from Facebook, Twitter and YouTube in the wake of the Jan. 6 insurrection at the U.S.
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It’s also stricter on sexual content and language than other platforms, she said. Many of Trump Media’s shareholders are individual investors and supporters of the former president. About 600,000 retail investors have bought shares in Trump Media, Nunes has told Fox Business, calling them “the most amazing part about our company.” Marco Iachini, senior vice-president of research at Vanda Securities, said individual investors piled into Digital World stock after the Trump deal was announced, and again in January, after he won the Iowa primary.
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The session was intended to serve as a way for the former president to reach potentially millions of voters directly. It was also an opportunity for X, a platform that relies heavily on politics, to redeem itself after some struggles. Musk, a former Trump critic, said the Republican nominee’s toughness, as demonstrated by his reaction to last month’s shooting, was critical for national security. “There is plenty of opportunity for the DJT stock price to recover, but it likely goes down first,” Emons added.
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Nonetheless, research firm Similarweb estimates that Truth Social had roughly 5 million active users in February of this year — including mobile users as well as website visitors. That compares with more than 2 billion for TikTok and more than 3 billion for Facebook, for instance, by Meta’s own reporting. However, the site fares better than rivals in the so-called “alt-tech” space, such as Parler, which just returned to Apple’s app store this week after being offline for more than a year, or Gettr, which had less than 2 million visitors in February. Former President Donald Trump on Wednesday announced plans to launch his own social networking platform called TRUTH Social, which is expected to begin its beta launch for “invited guests” next month.
- After reaching peaking at $79.38 per share on March 26, the stock — which trades under the ticker DJT, the initials of former President Donald Trump — has plunged by almost 70%.
- The deal is unlikely to immediately resolve Mr Trump’s most pressing financial issues, such as his New York fraud penalty.
- If its shares become less valuable, that can hinder its ability to raise money from the public market.
- Another outstanding question is what role the site might play if Trump decides to run for president again in 2024 and whether it would serve as a big enough megaphone when he no longer has the immediate influence he had on Twitter.
- The document, called an S-1, relates to warrants held by investors that can be transformed into shares of stock, as well as shares held by company insiders.
The deal is unlikely to immediately resolve Mr Trump’s most pressing financial issues, such as his New York fraud penalty. Digital World, or DWAC (pronounced D-whack), is what is known as a SPAC, or a shell business created expressly to buy another firm and take it public. “This is just the start,” Chad Nedohin, a deal supporter, said on his show DWAC Live on the video platform Rumble after the approval was announced. Backers of Digital World – the vast majority of whom are individual investors instead of Wall Street firms, many apparently Trump loyalists – seemed unfazed.
Shares in the newly combined company, Trump Media, could begin to be publicly traded next week under the stock symbol DJT, Trump’s initials. Trump’s audience on X is legions larger than on Truth Social, which became a publicly traded company earlier this year. Trump has just over 7.5 million followers on Truth Social, while his mostly dormant X account is followed by 88 million. Musk’s account, which hosted the interview, has more than 193 million followers. Muenster notes that while it is marketed as a free expression platform, Truth Social still engages in some content moderation, including limiting illegal or copyrighted material.
This is uncommon for social media companies looking to attract as many people as possible, since it may turn off some potential users. And unlike mainstream social media companies, which allow teenagers to sign up, Truth Social requires users to be at least 18 — though it does not verify ages. Before Truth Social, there was a short-lived blog on Trump’s personal website called “From the Desk of Donald J. Trump.” But it didn’t last long, and Trump’s camp was already hinting that the former president had a social media platform in the works. It is possible that the board of directors could vote to allow Trump to sell shares earlier than that.
And that board could be stocked with people close to Trump, including his son Donald Trump Jr., former wrestling company executive Linda McMahon, and Trump’s former trade representative Robert Lighthizer, according to a list of planned nominees. Here are some things to know about Trump’s social media platform and where it fits into the broader social media landscape. In its statement Tuesday, Trump Media said that while short selling is legal, it wants to advise “long-term shareholders who believe in the company’s future” about how to prevent their shares from being used in such a trade. That includes opting out of securities lending programs that would allow brokers to lend their shares, as well as making sure the stock isn’t held in a margin account. For Trump to get the additional shares, which are on top of his current 57% ownership stake of 78 million shares, Trump Media needs to trade at or above $17.50 per share for any 20 trading days within a 30 trading day period. The stock, which trades under Trump’s initials, DJT, marked its 20th trading day on Tuesday, which means that Trump qualifies for the bonus given that the stock didn’t plunge below $17.50 today.
It claims about 8.9 million sign-ups and in regulatory filings Trump Media warns prospective investors that it does not track metrics like user growth or engagement that could give them a sense of its operations. Several lawsuits recently filed over the merger’s terms did not affect the voting schedule but could ultimately impact the allocation of shares to people who played key roles in setting the merger in motion in late 2021. Musk, who described himself as a “moderate Democrat” until recently, suggested in 2022 that Trump was too old to be president again. Still, Musk formally endorsed Trump two days after his assassination attempt last month. Trump Media said its streaming TV platform will first unveil on the Truth Social app before eventually making its way to home TV streaming.
Trump’s accounts were also flagged multiple times for spreading false information about voting fraud in the 2020 presidential election. The release lists Trump as the chairman of the Trump Media & Technology Group, which would be formed by joining with Digital World Acquisition Corp., pending regulatory and stockholder approval. DWAC is a special purpose acquisition company, which sells stock with the intention of buying private firms, and the release says the corporation will invest $293 million in the Trump project.
Thierry Breton, a French business executive and commissioner for internal market of the European Union, warned Musk of possible “amplification of harmful content” by broadcasting his interview with Trump. In a letter posted on X, Breton urged Musk to “ensure X’s compliance” with EU law, including the Digital Services Act, adopted in 2022 to address a number of issues including disinformation. Long before he endorsed Trump, Musk turned increasingly toward the right in his posts and actions on the platform, also using X to try to sway political discourse around the world. He’s gotten in a dustup with a Brazilian judge over censorship, railed against what he calls the “woke mind virus” and amplified false claims that Democrats are secretly flying in migrants to vote in U.S. elections.
That’s noteworthy because one route for a publicly traded company to raise additional capital is through secondary stock sales. If its shares become less valuable, that can hinder its ability to raise money from the public market. Newer social media apps targeting conservative users, including Truth Social, Parler and Gab, haven’t come remotely close to matching the success of Facebook or X. That’s partly because Republican politicians and causes already draw large audiences on existing, better established platforms, so they see little reason to move to a new service. The company’s base of Trump fans, as well as its stock market swings, have prompted comparisons with “meme” stocks like GameStop. These types of stocks typically attract individual investors based on social media buzz, rather than traditional financial metrics favored by investors, such as revenue and profit growth.
A loss might be expected to hurt the share price, but a win could have the opposite effect, especially if it generated further demand from buyers hoping to curry favour with Mr Trump, said Michael Ohlrogge, a law professor at New York University. If Mr Trump were to sell a significant chunk of his shares, it could hurt the share price. The debut comes at a critical moment for Mr Trump, who has been scrambling for cash to pay legal penalties and owns more than half of the firm’s shares. “As a public company, we will passionately pursue our vision to build a movement to reclaim the Internet from Big Tech censors,” said Trump Media chief executive Devin Nunes, a former congressman. By comparison, the recently-listed Reddit currently has a market value of about $11bn. It says 8.9 million accounts have been created since the platform launched to the general public in 2022 as an alternative to mainstream sites such as Facebook, but it is not clear how many are active.
The price of the warrants, which give their holders the right to buy the stock at a certain price, has plunged 43% from their March 26 peak and now indicate the share price could decline to $17.50, he said. The company’s board, which is stocked with allies including one of his sons, could potentially change that rule, but analysts have said they think that would be unlikely to happen immediately. The move was accomplished via what is known as a SPAC, a merger with a publicly listed shell company, Digital World Acquisition Corp, which was expressly created to buy a company and take it public. Kristi Marvin, chief executive of SPACInsider, compared Trump Media – which trades under the ticker DJT for Mr Trump’s initials – to a meme stock, in which prices are untethered from the business prospects.