Trump triggers investment frenzy

Last week shareholders in special-purpose acquisition company Digital World Acquisition Corporation (DWAC) voted to merge with Trump Media & Technology Group (TMTG), Donald Trump’s media business. The new firm will list on the Nasdaq, says Ortenca Aliaj in the Financial Times.

The merger and listing were agreed in 2021, but had been “marred by delays”, thanks to various investigations by regulators. DWAC has paid an $18m fine to the US Securities and Exchange Commission (SEC) as it “failed to disclose a material conflict of interest”. In addition to the Truth Social social-media arm, Floridabased TMTG also plans to launch a streaming service offering “non-woke” entertainment to the US public.

Investors beware, says Dareh Gregorian for NBC News. When Trump took his casinos public in 1996, ironically with the same ticker (DJT), the company ended up “bleeding cash” before going bust and delisting in 2004.

More importantly, the fact that the deal nets Trump roughly $3bn at a time when he is suffering from a very public “cash crunch”, a result of a judgment against him in a civil trial, creates an additional complication. While Trump is technically prohibited from selling shares in the merged company for at least six months, the board of directors, which includes his eldest son, “could vote to allow the former president to sell shares earlier than that”, which could create massive downward pressure on the share price.

Truth Social faces an uphill struggle, says Charley Grant in The Wall Street Journal. It made only $3.4m in sales in the first nine months of 2023, and a net loss of $49m over that same period. It also faces huge rivals such as Meta Platforms’ Facebook and Elon Musk’s X. Still, none of this seems to matter to his “ardent supporters” who are “piling into his latest deal anyway”. This recalls the 2021 memestock craze.