Getting what they deserve
Trump’s investors will lose their shirts – but they might earn a precious hint of truth
In the latest news from Fantasy Land, a non-existent socialmedia company has chosen a nontech, non-media executive to head up its non-operational operations. Devin Nunes, a Republican congressman from California, is leaving Capitol Hill to run Donald Trump’s media company.
Trump and a few Wall-Street whizzes have set up a specialpurpose acquisition company (Spac) called Digital World Acquisition Corp. (DWAC). The soleaimofDWACistobuya media firm, Trump Media & Technology Group, that they also set up.
Your correspondent admits to some first-hand knowledge of Spacs. One of the firms with which he is associated recently completed a Spac deal. In our experience, andbyour cynical reckoning of the way the world works, it is unlikely that most Spac deals will lead to any real-world business success. It’s hard enough to find a good business at a good price.
But buying a non-existent business founded by the same people who started up the Spac in the first place is a clear and present danger.
Typically, at least the seller knows his business. In this case, neither buyer nor seller has any idea how to build a successful socialmedia company. Adding a political hack with no experience either in technology or media, nor anything other than dairy farming (perhaps) and political chicanery surely dooms the project altogether. We might add, too, that “Truth Social”,
Trump’s proposed socialmedia platform, invites ridicule. We humans only get a faint whiff of truth, rarely, when the wind is blowing in the right direction, and we have just suffered some crushing loss. Truth 24/7 is much more than we can handle.
The odds against Spac investors
Adding to the odds against Spac investors, the pros are circling like vultures, ready to pick the carcass clean. Over the weekend, the new Trump group announced that it had struck a deal to raise $1bn from hedge funds and other large players. The deal gives these insiders the right to buy shares for 40% below the retail price.
These are not patient, long-term investors, with faith in the new business. These are fast-money mavens, preying on ideologically driven, naive “investors”, who think they can make the world a better place and make money, too. These insiders expect to make money in the old-fashioned way… buying at wholesale… and selling to the gullible at retail.
This is okay with us. It’s fun to watch. However it goes, it’ll prove our maxim – that “investors don’t get what they want or what they expect; they get what they deserve”. And in this case, as the new project inevitably heads to the finance morgue, they are likely to get a hint of Truth as a bonus.
“Trump’s proposed socialmedia platform, ‘Truth Social’, invites ridicule”