Truth Social, the social media app from Trump Media, could potentially attain a valuation exceeding $5 (£3.96) billion. Digital World Acquisition Corp. investors have greenlit a merger agreement with Donald Trump's company.
Trump's Truth Social, despite ongoing financial losses, is poised to integrate into a publicly traded entity. After lengthy delays, the merger has ultimately received approval.
During a Friday vote, a publicly traded shell company, established solely for the acquisition of Truth Social's parent company, Trump Media & Technology Group, approved the merger. The Associated Press initially reported this critical update.
I can see why Truth Social has a $5 billion valuation. pic.twitter.com/b9HyP8vThT
— Darren Kaplan (@DarrenKaplan) March 25, 2024
The merger will probably be valued at approximately $5.7 (£4.51) billion. Notably, this merger will provide the former US president with a timely infusion of $3 (£2.37) billion amidst escalating legal expenses and penalties.
Trump's social media venture: A financial rollercoaster
Despite the substantial figure, Truth Social has encountered significant losses. Notably, the company anticipates these losses to persist "for the foreseeable future." To those unaware, Trump unveiled the social media platform following his suspension from Twitter (now known as X).
Truth Social's presence is notably modest compared to other social media platforms like TikTok, X, Facebook and Instagram. According to data shared by research firm Similarweb and reported by CBS News, Truth Social had approximately 5 million active members (including mobile users and website visitors) as of February this year.
For comparison, TikTok has over one billion monthly active users. Facebook has 3.049 billion active users monthly, and X/Twitter has more than 350 million worldwide, according to Statista. Still, on Saturday, Trump proudly conveyed his affection for Truth Social to his online followers.
“TRUTH Social to Become Public Company” pic.twitter.com/4zmQDfWoOn
— Dan Scavino Jr.🇺🇸🦅 (@DanScavino) March 26, 2024
According to a securities filing by DWAC in November, Trump's social media app incurred losses amounting to $31.6 (£25) million from its launch in early 2022 to mid-2023, as reported by Reuters. The company experienced a $49 (£38.76) million loss in the initial nine months of 2023, with revenue totalling just $3.4 (£2.69) million.
DWAC merger: Analysing Trump's financial fortunes
Jay Ritter, an IPO specialist at the University of Florida, told The AP that the substantial losses indicate the company's value is nowhere near what the stock price implies. DWAC acknowledged the risk posed by the company's losses in filings with US regulators.
Aside from that, it highlighted the high failure rate commonly associated with new social media platforms. However, this concern doesn't appear to have deterred DWAC backers. Many are individual retail investors, with some showing support for Trump.
"I am holding and not selling! I believe in TRUTH and MAGA," a member of a Truth Social group posted on Friday, CBS News reported. Despite the challenges faced by Truth Social and Trump Media, there has been a notable development in Trump's financial landscape.
According to Bloomberg, Trump's net worth has surged by over $4 (£3.16) billion, elevating his current total to approximately $6.5 (£5.14) billion. This windfall stemmed from the recently approved merger between Trump's social media company, Trump Media & Technology Group, and a shell company, Digital World Acquisition Corp.
🚨President Trump’s Net Worth Hits $6.5 Billion, Making Him One of World’s 500 Richest People
— AJ Huber (@Huberton) March 25, 2024
Thanks for the "Special Treatment"🤣🤣🤣
Trump's POLLS go up, net worth goes up, and Truth Social goes up 39%.
They will stop at nothing to GET Trump.
Vote for Trump! Prevent WWIII pic.twitter.com/csdPWigWKq
Trump holds nearly 80 million shares, which translates roughly to about 58 per cent ownership of Trump Media. With DWAC's closing price on Monday at $49.95 (£39.51) per share, Trump's stock amounted to $4 (£3.16) billion in theoretical value.
