In a move that has shareholders scratching their heads, former President Donald Trump took to his social media platform Truth Social on Saturday to declare, “I LOVE TRUTH SOCIAL.”
This proclamation of affection came merely a day after the shell company Digital World Acquisition Corp. (DWAC) saw its stock price plummet by nearly 14% following shareholder approval of its merger with Trump’s social media company.
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- Trump declares love for Truth Social amid DWAC stock plunge after merger.
- Concerns over Trump Media’s ability to generate revenue and Trump’s legal costs.
- Trump’s majority stake could allow him to cash out early, depressing stock further.
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Trump Declares ‘I Love Truth Social’ as DWAC Stock Tumbles After Merger Approval
On Friday morning, just hours before the shareholder vote, DWAC’s stock was trading at $44.20 per share.
However, by the end of the trading day, the stock had nosedived to $36.94 per share, representing a substantial 14% drop.
Although the stock recovered slightly in after-hours trading, closing at $38.55 per share, it was still a significant 12.7% lower than its opening price.
The Potential Reasons Behind the Drop
This dramatic decline in DWAC’s stock price could be attributed to several factors.
Firstly, investors may be concerned about Trump Media & Technology Group (TMTG), the company that has merged with DWAC, ‘s ability to generate substantial revenue.
TMTG, which owns the Truth Social platform, reported losses of nearly $50 million over the first three financial quarters of 2023, with revenue of less than $3.5 million during the same period.
Additionally, Trump’s ongoing legal battles and the potential for him to cash in on his majority stake in the newly merged company to cover legal costs could be weighing heavily on investors’ minds.
Trump currently faces civil legal judgments totaling over half a billion dollars in New York federal and state courts, mounting legal bills from those cases, and four criminal prosecutions as he gears up for another presidential run in 2024.
The Future of Trump Media and Truth Social
Under the merger terms, Trump, who will hold at least a 58% stake in Trump Media, will be initially blocked from selling shares for six months.
However, the new board of directors, which is set to include his son, Donald Trump Jr., and other close allies, could vote to lift this restriction, allowing Trump to sell off shares to cover his legal costs much sooner.
Such a move could further depress Trump Media’s share price and lead to other shareholders selling their stock, creating a downward spiral in the company’s valuation.
Trump Media will begin trading on the NASDAQ stock market next week, using the ticker symbol DJT – the same ticker used by Trump’s previous publicly traded company, Trump Hotels & Casino Resorts, which filed for bankruptcy protection in 2004.
As the dust settles on this highly anticipated merger, investors will be closely watching the developments within Trump Media and Truth Social, hoping that the former President’s love for the platform translates into tangible success and growth for the company.
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