Donald Trump's $5.7-Billion Truth Social Merger Approved by Shareholders. All You Need To Know

The merger and its subsequent financial implications for Trump and TMTG unfold amid a broader discussion about the role of social media in politics and public discourse.

The merger between Digital World Acquisition Corp (DWAC) and Trump Media & Technology Group (TMTG), the entity behind former US President Donald Trump's social media platform Truth Social, received shareholder approval this Friday. This merger, estimated to be valued at approximately $5.7 billion, positions Trump to gain significantly from his substantial stake in the company, estimated to be around $3.3 billion.

This financial boon arrives at a crucial time for Trump, who is currently navigating through numerous legal challenges, including a hefty $454 million civil fraud judgment in New York. The approval by DWAC shareholders marks a pivotal step towards listing TMTG on the stock market, a move that could potentially inject $300 million in cash into the social media firm. Truth Social reported a loss of $10.6 million in its operations over the first nine months of 2023, against a revenue of $3.4 million, highlighting the critical nature of this infusion.

However, the path forward is not without its hurdles. Legal challenges posed by DWAC's former CEO, Patrick Orlando, and Trump's former business associates, Andy Litinsky and Wes Moss, who are seeking a larger share of the company for their prior involvement, cast a shadow of uncertainty over the finalisation of this deal. Moreover, Trump is restricted from selling his shares or leveraging them for six months post-merger, as per the terms he agreed to earlier.

Despite these challenges, the potential valuation of TMTG post-merger is impressive, with estimates ranging up to $5.7 billion on an undiluted basis and possibly $8.6 billion when fully diluted. This valuation surge is largely attributed to enthusiastic support from Trump backers and retail investors, which saw Digital World's stock nearly quadruple since the announcement of its association with TMTG in 2021.

Yet, following the shareholder approval of the merger, Digital World's shares saw a decline of over 10 per cent on Friday. This fluctuation occurs as the platform seeks to establish itself in a market dominated by giants like Elon Musk's X (formerly Twitter), which boasts over half a billion monthly users. In contrast, Truth Social has garnered 8.9 million sign-ups to date, with Trump's own following on the platform standing at 6.7 million, a stark contrast to his previous and current follower counts on X.

This merger and its subsequent financial implications for Trump and TMTG unfold amid a broader discussion about the role of social media in politics and public discourse, underscoring the former president's continued influence and the volatile nature of tech investments.