Home World How can Trump make $3 billion from listing Truth Social on the market?

How can Trump make $3 billion from listing Truth Social on the market?

0 comment
How can Trump make $3 billion from listing Truth Social on the market?

Donald Trump amassed a $3 billion paper fortune on Friday when Truth Social, the social media platform he created, completed a merger that put the company on the U.S. stock exchange.

Shareholders of Digital World Acquisition, the publicly traded company expected to become Trump Media & Technology, approved the transaction Friday morning, which could significantly increase Trump’s wealth.

How was Trump able to add over $3 billion to his wealth?

Trump Media & Technology, which owns the technology platform Truth Social, has merged with a so-called special purpose acquisition company – or Spac – called Digital World Acquisition. Spacs go public to raise money, then buy or merge with a company, which in this case is Trump’s media company.

Trump Media has generated less than $5 million in revenue since its launch in 2021. But, boosted by Trump supporters, Digital World shares are up 140% this year and currently trade at just a little less than 42 dollars. Trump will own 78.75 million shares in the new combined company, meaning that at that price, Trump’s stake would be worth $3.3 billion.

Why is Trump’s stake worth so much if Truth Social won so little?

Digital World is a meme stock, a term for capital that is boosted by amateur investors in online forums via Internet memes (an image, video, or piece of text copied and distributed, often reappearing with slight modifications).

The most famous example of meme stock valuation is that of GameStop, an American video game retailer which, although it seemed to have a downward trend in terms of business prospects, suddenly reached a valuation of over 22 billion dollars at the height of a buying frenzy in 2017. 2021 – but is now worth just over $4 billion.

In an example of a meme about the digital world page on Reddit, a photograph of Trump pointing is emblazoned with the slogan “He’s right!” Get more from DWAC (Digital World Acquisition Corp)! » Another shows a bald eagle carrying the American flag in its claws with the letters DWAC above it.

Julian Klymochko, managing director of Accelerate Financial Technologies, which has a fund focused on Spac, says Digital World’s skyrocketing valuation has become untethered from Trump Media’s fundamental value and its sales of less than $5 million of dollars.

“The market capitalization of the security is completely independent of its underlying fundamental business value. The stock price is purely based on the fact that it’s a meme stock,” he says.

ignore previous newsletter promotion

Can Trump cash in his stake?

Trump will not be able to sell his shares immediately: as is the case in Spac transactions, major shareholders cannot sell their shares for six months after the transaction.

Does Trump need money?

Trump has $400 million in cash, as well as properties and other investments, but he needs to come up with nearly half a billion dollars by Monday. A New York judge formally ordered him to pay $454 million following a civil fraud case that determined he manipulated the value of his properties to obtain favorable loan and insurance rates . And this week, his lawyers said it was “virtually impossible” for him to get the bond he needed to secure payment, after 30 bail bond companies turned him down.

You may also like