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)

As of now, the launch of the Truth Social app has been delayed, and the app is not available at all on Android platforms. (1)

Shares Of Trump’s Truth Social SPAC Rise After Merger Vote Delayed Again

(1) Gura, David: “Trump’s Social Media Dealt Another Setback On the Road to Stock Market Listing,” posted on npr.com on 9/8/2022
(https://www.npr.org/2022/09/08/1121749404/trump-truth-social-media-spac-stock-listing)
*2) Stanton, Andrew: “Company Behind Trump’s Truth Social Lost 6.5M, Stock Plunged 72 percent,” posted on Newsweek.com on 8/27/2022
(https://www.newsweek.com/company-behind-trumps-truth-social-lost-65m-stock-plunged-72-percent-1737585)
(3) “Truth Social,” posted on truthsocial.com website
(https://truthsocial.com/)
(4) “Truth Social,” posted on Wikipedia.com
(https://en.wikipedia.org/wiki/Truth_Social)