DONALD TRUMP’S PAPER PAYOUT DEFIES FINANCIAL TRUTH
NEW YORK - Donald Trump is pretty good at looking rich on paper. The Republican presidential candidate’s latest tangle with investors is no different.
On Friday, shareholders of Digital World Acquisition finally approved a deal to buy his nascent Trump Media & Technology, giving it a stock market listing. Based on the blank-check company’s stock price on Friday, Trump’s media firm is worth some $5.6 billion.
If all goes as planned, the former president will be able to add at least 55% of that to his net worth. On any objective measure, though, his Truth Social platform is worth a fraction of that.
Trump struck the deal back in 2021 when socalled special-purpose acquisition companies were launching
▴ transactions at a record pace. The industry has pulled back since then, creating more than a few blips for DWAC. In July last year, it settled charges with the U.S. Securities and Exchange Commission, which accused it of fraud. It also extended the date of the shareholder vote.
Now that DWAC has the green light, TMTG will become a public company. Judging by the limited information it has disclosed so far, it has a lot of work to do to justify investors’ faith.
Truth Social, which Trump launched after other social media networks banned him, has 8.9 million “sign-ups,” according to a February filing. Compare that with rival network Reddit, which went public this week and now has an $8 billion valuation. Reddit has 73 million unique daily users, implying investors value each one at about $110.
On that crude comparison, TMTG would worth less than $1 billion. Even that is a stretch. Not
be
▴ all people who sign up for a social media account visit regularly, so Truth Social’s number of unique users is probably lower. TMTG says adhering to such “traditional key performance indicators” could “divert its focus.”
What’s clear is that the company is still seeking a business model. It had revenue of just $3.3 million in the first nine months of last year. Reddit brought in $804 million in sales in 2023.
Trump cannot
cash
in
his paper
windfall for six months. Meanwhile investors in DWAC – soon to be TMTG - have fair warning. Public filings detail a litany of the former real estate mogul’s failed endeavours, including the bankruptcy of the Taj Mahal in 1991, the Trump Plaza, the Trump Castle,
and the Plaza Hotel in 1992, and other bankruptcies in 1995, 2004, and 2009. The surprise would be if TMTG avoided a similar fate.