Social media platforms may be full of family photos and internet memes, but today's social media platforms also display plenty of friendly and not-so-friendly political discussions. One recent addition to social media has been Truth Social. Truth Social brands itself as a "'Big Tent' social media platform" that purports to promote "discussions without discriminating based on political ideology." (3)

Trump Media and Technology

Media watchers know that Truth Social was founded by former President Donald Trump and launched by his company, Trump Media & Technology (TMT), in February 2021. B Since the middle of 2022, Truth Social has been facing "financial and regulatory issues." (4)

Although the former President admitted he knew it would be challenging to launch a social media platform large enough to compete with Facebook or Twitter, he remains intent on raising over one million dollars (the amount allegedly needed to keep the platform running). (1) Having been banned from Twitter, the former President has used Truth Social as his media outlet for communicating with his followers. (2)

Digital World Acquisition Company

When securing a place for Truth Social on the stock market, TMT decided to opt for a SPAC (Special Purpose Acquisition Company - also called a "shell company) merger with Digital World Acquisition Company (DWAC) which was already listed on the NASDAQ stock index. (4)

The merger (announced in October 2021) was initially met with approval by DWAC stockholders, and DWAC stock rose in value. However, recent inquiries about TMT by the SEC have postponed the completion of the stock offering. During the SEC's investigation into the merger, they determined they needed more information about TMT. The SEC served subpoenas on TMT, but some TMT board members' responses have been delayed because they are involved in giving information to a grand jury for other legal issues. (1)

DWAC Stock Price

DWAC is concerned by the delay because SPAC transactions have a specific timeline. If the timeline cannot be met, DWAC has protested this will prevent the merger's stock listing. DWAC is also upset because SEC has now sent subpoenas to their board members about their communication methods. Executives from DWAC have assured their stockholders they are cooperating with the SEC, but DWAC stock has reportedly now fallen 72% (2) due to SEC inquiries. This stock decrease has reportedly resulted in "a financial loss of 6.5 million dollars to DWAC during the first half of 2022." (1,2)

DWAC has been attempting to get its stockholders' approval to request an extension to the deadline. If the merger's current deadline becomes too close without the needed signatures, Trump Media could infuse DWAC with more money to secure the extension. If this extension works, it will push the deadline forward by three months. If that deadline nears its end, Trump Media could provide more funds to repeat the process. There is a possibility DWAC may withdraw from the merger, but when questioned about this possibility, Trump did not show concern, as he feels certain another company will emerge to provide Truth Social with a stock presence. Despite the ongoing legal challenges by the SEC, TMT may still find another company to merge with. Assistant Law Professor Michael Ohlrogge from NYU has stated the merger could still be completed as long as the potential legal risks are fully disclosed to the other company’s stockholders. (1)

There is no doubt that former president Donald J. Trump is a real estate mogul. He is a multi billionaire with many real estate holdings around the world, key among them being the iconic Trump Tower in New York. After vacating the office of the POTUS, not much has been heard from Trump except reposting of his press releases. Recently, however, major media outlets around the world have been flooded with stories and interviews about the Trump SPAC. This is one of Trump's major successes and is bound to make him a lot of money. Read further to learn more about the company.

Trump SPAC Explained

A special acquisition company (SPAC) is a type of blank check company, more closely related to an exchange traded fund than it is to a traditional company. A blank check company contains several types of securities that can be structured to fit the investment goals of the shareholders. One of these types of securities is called an "unit". A unit can be viewed as similar to a share of stock, except that instead of giving you ownership in an actual company, it gives you limited rights to certain assets of the company. These rights are limited because they are usually restricted to receiving proceeds from certain sale transactions of the company.

The Trump SPAC was created with the intent to use the proceeds from the sale of units to buy up portions of other companies by buying large numbers of their shares on the market. The Trump SPAC will also use the proceeds from sale of units on other transactions like acquisitions or paying down debt.

Trumps new venture is a special acquisition company known as Digital World Acquisition Corp. The SPAC trades under the ticker - DWAC - on Nasdaq and other major exchanges. All the frenzy about the Trump SPAC emanates from the recent announcement of DWAC acquisition of TMTG. After the announcement the company stock grew by more than 800% in the first two days of the announcement. So far, the stock has grown by over 1,000% and has been compared to the AMC and GameStop stock by Reddit's WallStreetBets. It is interesting to note that it's not just DWAC stock that is rising fast at the moment. Phunware, a software startup massively involved in the Trump campaign also saw a rapid rise in stock prices due to the Trump effect.

How He is Backing the SPAC

Trump has gone public to dismiss major social media companies for banning him, noting that while the Taliban thrives on social media, major companies have banned him from their platforms. His goal was to acquire TRUTH social, a social media giant that can take on big tech. Going public with his statements is what attracted tech investors and his followers and convinced them to purchase this meme stock. DWAC announced that it would be acquiring the Trump Media & Technology Group popular for its Miss Universe Pageant rights.

In a press conference at the White House Rose Garden, Donald Trump stated that this issue is a matter of life and death. “You would think a company like Facebook would understand the seriousness of a threat like ISIS. The fact remains that Facebook banned me from their platform.”

“I have been calling for a major investigation into these companies that have been silencing so many voices,” Trump said. “They are controlling what we can and cannot see. It’s a dangerous thing when they are controlling your information.