The parent company of Truth Social, Trump Media & Technology Group, is likely to become a publicly-traded entity as early as the upcoming week. This follows the approval of a merger between the company and the special purpose acquisition company (SPAC), Digital World Acquisition. The merger could value at more than 3 billion dollars for Donald Trump and stimulate an epic meme stock wave, reminiscent of the frenzy incited by GameStop.
Interestingly, the primary cash influx in the stock has not been driven by the WallStreetBets community on Reddit but by allies of the Make America Great Again (MAGA) movement. This year, Digital World’s shares have risen by approximately 140%, underlining the eagerness of the retail investors in light of the forthcoming merger. Frequent discussions and exchanges on Truth Social forums indicate that the motivation for these investors chiefly stemmed from their allegiance to Trump.
Commenters on these platforms expressed their excitement for the upcoming transition. Users boasted about their investments in Digital World Acquisition, expressing gratitude for being part of this journey. As the IPO loomed, reactions ranged from prayers to digital currency enthusiasts’ favorite memes.
However, this enthusiasm wasn’t matched on the WallStreetBets thread on Reddit, the forum credited for sparking the GameStop and AMC shares’ meteoric rise. Many traders expressed skepticism about Truth Social’s Wall Street debut, dismissing the stock as worthless and prophesying an eventual free fall, irrespective of whether Trump sheds his shares.
Notably, Digital World Acquisition has already experienced a taste of meme stock surge, with its share prices sky-rocketing to $100 each and reaching a market cap of $10 billion in 2021. Nonetheless, as of now, the market cap is slightly above 1.5 billion dollars, and the stock could experience further fluctuations. The company suffered a loss of $49 million during the first nine months of last year, generating a measly revenue of $3.4 million.
Donald Trump’s nigh unlimited power within the business has become a point of focus. A previous filing declared that no personal or political conduct could be considered a breach of agreement, irrespective of its nature – whether “dishonest, illegal, immoral, or unethical.” Additionally, Trump has full discretion to elect board members and can unilaterally take decisions on matters that usually demand stockholder’s approval or reject buyouts.
The Securities and Exchange Commission (SEC), which keeps a keen eye on the agreement, has delayed the merger on numerous occasions, seeking further documentation and details about the deal. Given the contentious nature of the merger, any exemptions permitted for Trump could invite queries from regulators in the future.
