According to a report by The New York Times, shareholders gave their approval on Friday for the merger between former President Donald Trump’s media enterprise and Digital World Acquisition Corp., a move intended to make the company publicly traded.
This strategic move involves Trump’s Truth Social platform, and upon completion, the company will be listed on the stock market. The merger is projected to infuse over $300 million into Trump Media, which has nearly depleted its cash reserves, ensuring the continued operation of Truth Social.
The valuation of the merged entity surpasses $5 billion, implying that Trump’s personal holdings will exceed $3 billion. However, this development occurs amidst Trump’s looming deadline to settle a $454 million judgment in a New York fraud case by Monday or alternatively post bond for an appeal.
Yet, the cash from the merger cannot be utilized for this purpose due to restrictions prohibiting Trump from selling his shares or using them as collateral for six months, as reported by The Times. Nevertheless, Trump may seek a waiver from the merged company’s board, which is expected to comprise his allies, as per The Washington Post, including figures such as Donald Trump Jr. and former administration officials Robert Lighthizer, Linda McMahon, and Kash Patel.
Even with a potential waiver, Trump’s ability to sell shares would be limited, capped at 1% of outstanding shares quarterly, Politico highlighted. Furthermore, offloading a substantial portion of shares in the future could negatively impact investor confidence and diminish the company’s value, given its heavy reliance on Trump’s reputation, cautioned Kristi Marvin, founder of research firm SPACInsider.
Critics have labeled Trump Media a ‘meme stock,’ contending that its valuation, exceeding $6 billion, is disproportionate to its financial performance. The Washington Post reported that Trump Media incurred a $49 million loss in the initial nine months of the preceding year, with revenue totaling $3.4 million.
