Trump's Truth Social Bet: A Political Windfall in the Making

📝 SUMMARY: Donald Trump's venture into social media with Truth Social may become his most lucrative investment, potentially yielding a $3.5 billion return if a merger with Digital World Acquisition ($DWAC), a special-purpose acquisition company (SPAC), is finalized. This deal, buoyed by Trump's supporters who have significantly driven up the SPAC's share value, suggests Truth Social could be valued around $6 billion. Trump's enthusiastic base, treating stock investments as political statements similar to the GameStop ($GME) frenzy, has overlooked traditional investment rationale, propelling the stock's valuation to these heights. Trump is poised to own approximately 60% of Truth Social post-merger, translating his stake into billions.

The completion of Truth Social's public listing hinges on the approval of Digital World Acquisition shareholders, with a vote scheduled. If successful, Truth Social could replace Digital World in the stock market, adopting Trump's initials, DJT, as its ticker symbol. This financial maneuver is expected to supply Truth Social with around $300 million, crucial for its continuity given its dismal sales figures since launch. However, Trump's ability to capitalize on this investment is tethered to a six-month lock-up period post-merger, after which he could sell his shares, subject to the SPAC's approval for any earlier transactions.

The anticipation of Trump potentially liquidating his stake might usually prompt investors to pre-emptively sell, yet the unique dynamics of his supporter base could defy such financial prudence. The final value of Trump's stake remains uncertain, vulnerable to stock market volatilities and pending lawsuits which could redistribute shares within the company. This scenario underscores the complex interplay between political loyalty and financial investment, with Trump at the nexus of an unprecedented economic event.

🔍 SOURCE: https://www.wsj.com/finance/stocks/how-trump-could-make-billions-from-struggling-truth-social-bce70fd0?mod=hp_lead_pos6