New York Attorney General Letitia James seems hellbent on seizing President Donald Trump’s assets. Most of Trump’s wealth is tied up in his real estate empire and illiquid, so it hasn’t been easy for Trump to raise the cash necessary to pay fines in the recent civil case brought against him by James. One place he could potentially generate wealth with greater liquidity could be his ownership of part of Truth Social, which is preparing to go public via a Special Purpose Acquisition Vehicle buyout. Charley Grant reports at The Wall Street Journal:
Small investors have aggressively bought up shares of a shell company whose investors are voting on whether to take public his social-media company, Truth Social. Shares of the acquirer, known as Digital World Acquisition Corp., DWAC -7.97%decrease; red down pointing triangle are up 140% this year—and, judging by the comments in a forum of nearly 8,000 Truth Social users, not because buyers are anticipating long-term business success.
“I bought several times last Monday & Tuesday, little by little to show support of the stock,” said a Truth Social user going by the handle of fantasticblush.
“This is a Truth Movement and no matter what happens tomorrow this merger will happen tomorrow or in the future,” said Truth Social user ajdelval. “We will win this war no matter what.”
The episode is reminiscent of the 2021 meme stock craze, when investors bought up shares of businesses with poor growth prospects such as GameStop and Bed Bath & Beyond, causing the stocks to surge. But the stakes extend far beyond the stock market this time. The Republican nominee is in line to earn a windfall of about $3.5 billion if the vote goes through, potentially easing a financial crunch stemming from a $454 million judgment against him in a civil-fraud case.
The social network’s parent is set to go public by combining with a special-purpose acquisition company, or SPAC. A shareholder vote to approve the merger is scheduled for Friday. Trump’s company could replace the shell company in the stock market as soon as Monday. The new ticker would be DJT, a nod to Trump’s initials.
The clock is ticking for Donald Trump to pay a penalty of nearly half a billion dollars in his New York civil-fraud trial. Here’s a look at the options he could use to finance his mounting legal bills. Illustration: Xingpei Shen/Ryan Trefes
Truth Social faces a challenging business outlook. The company booked about $3.4 million in revenue in the first nine months of 2023, according to a securities filing, and a net loss of about $49 million over that same period. The social network competes against such well- established competitors as Meta Platforms’ Facebook and Elon Musk’s X.DWAC shares, which closed Thursday at $42.81, are “not trading on fundamentals, absolutely not,” said Kristi Marvin, chief executive of SPACInsider.com. “Institutions are not trading this.”
This isn’t the first time DWAC shares have surged. They closed as high as $97.54 in March 2022, then fell 87% over the next 15 months, in the midst of a broad stock-market selloff.
“What a message it would be if we closed at $45.47 today,” said user PrattyDaddy, an apparent reference to Trump’s status as the 45th and potentially 47th U.S. president. “Great way to say ‘Patriots in Control’ or ‘Trust the Plan’.”
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