Merger of Trump’s Social Media Firm Could Provide Him Needed Cash
Shares of former President Donald J. Trump’s social media company could start trading on the stock market as early as Monday, immediately raising his net worth by around $3 billion — wealth that Mr. Trump may be able to tap to pay his mounting legal bills as he seeks a second presidential term.
Mr. Trump urgently needs to come up with cash by Monday to cover a $454 million penalty imposed by a New York judge, who found that he had fraudulently inflated the value of his real estate properties in dealings with banks. This week, he asked an appeals court to pause the judgment or accept a much smaller bond. Last year, one of his political action committees spent $50 million on legal bills.
The imminent public debut of Trump Media & Technology Group — the parent company of the Truth Social digital platform — could provide Mr. Trump a way to raise cash, but it won’t be straightforward.
Trump Media is going public by merging with a publicly traded shell company called Digital World Acquisition Corporation. Shareholders of Digital World are expected to approve the merger on Friday after years of delay caused by regulatory and criminal investigations that came close to derailing it.
Under the terms of the merger agreement, major shareholders of Trump Media are barred from selling their shares for six months. The so-called lockup provision, which typically applies to any company going public, is meant to limit the number of shares available for sale and trading, and to avoid the perception that early shareholders don’t have faith in the company’s future.
But because Mr. Trump holds enormous sway over the company with his stake of more than 60 percent, and because his brand is critical to Trump Media’s success, he could try to get around those provisions. Mr. Trump could ask the board of Digital World to waive his restrictions on selling shares before its planned merger with Trump Media goes to a vote.
Or he could wait for Trump Media to start trading before asking its board members — some of whom are also on Digital World’s board — to waive the lockup period. Trump Media’s seven-member board is likely to be amenable to such a request partly because it is expected to include three former members of his administration. His eldest son, Donald Trump Jr., will also join the board.
Mr. Trump could also obtain the board’s blessing to transfer his shares into a trust, or give them to a family member as a gift. By placing them in a trust, Mr. Trump would be able to use the shares as collateral for a loan; a family member, too, could borrow against those shares.
If the shareholder vote goes as expected on Friday, Trump Media will begin trading next week under the stock symbol DJT. Based on Digital World’s current stock price, Mr. Trump’s 79 million shares will be worth more than $3 billion, on top of the $2.6 billion that Forbes estimated Mr. Trump was worth in October.
But it is hard to predict how shares of Trump Media will trade, given that it is losing tens of millions of dollars and generated just $3.3 million in advertising revenue over the first nine months of last year.
Once the merger is complete, Digital World’s roughly 400,000 shareholders — most of them individual investors — will become stockholders of Trump Media. And many of Digital World’s shareholders have long been boosters of the stock — and Mr. Trump — on Truth Social. Beginning in January, as Mr. Trump got closer to securing the Republican nomination and as the deal’s likelihood of approval grew stronger, shares of Digital World soared, rising more than 140 percent this year, making the former president’s stake ever more valuable.
For Truth Social, the merger will allow the social media site to widen “the realm of free speech and vigorous debate at a time of unprecedented censorship by Big Tech and by the government itself,” a spokeswoman for Trump Media said.
Trump Media, based in Sarasota, Fla., came into existence in an almost improbable manner. In early 2021, two former contestants on his old reality TV show, “The Apprentice,” Andy Litinsky and Wes Moss, hatched a plan to create a conservative media giant centered on Mr. Trump after he was barred from Twitter in the wake of the Jan. 6 attack on the U.S. Capitol.
Mr. Trump was taken with the idea, and an agreement was signed just weeks later. Mr. Litinsky and Mr. Moss would provide consulting services to the new entity, called Trump Media, while Mr. Trump would lend his brand and support to it — taking a majority stake in exchange.
Truth Social, which has become Mr. Trump’s primary bullhorn for pillorying his critics and political opponents, launched in 2022 as part of Trump Media. The company early on had signed a licensing agreement with Mr. Trump to ensure that he would post on Truth Social and not other platforms.
The goal all along was to take Trump Media public through a merger with a special purpose acquisition company, or SPAC. The sole purpose of such companies is to raise money from investors and merge with an operating business, which then becomes the publicly traded entity.
Digital World, a SPAC run by Patrick Orlando, a Florida businessman, had gone public in September 2021 and raised $300 million from investors. The next month it announced a merger with Trump Media, but soon afterward, it was discovered that Mr. Orlando and representatives for Trump Media had begun deal talks months ahead of Digital World’s initial public offering. Securities rules prohibit SPACs from engaging in meaningful merger talks before going public.
The Securities and Exchange Commission opened an investigation into those deal talks, and Digital World later agreed to pay an $18 million penalty to the regulator, a settlement that allowed the deal to move forward.
A February lawsuit filed by Mr. Litinsky and Mr. Moss, who claimed Trump Media was trying to diminish their stake, also had threatened to delay the merger before the judge in the case indicated he would let the deal proceed while the dispute gets sorted out.
Beyond the immediate personal benefit to Mr. Trump, the biggest question now facing Trump Media is its business future, and what it plans to do with the $300 million that will transfer from Digital World if the merger is approved.
The deal is beneficial not only to Mr. Trump but also to Truth Social and Trump Media, which has exhausted most of its available cash. Truth Social remains a minnow in the social media universe compared with far bigger platforms like X (formerly Twitter) and Meta’s Facebook, Instagram and Threads. To date, about 10 million people have downloaded the Truth Social app — all of them in the United States, according to Sensor Tower, a data provider.
