Donald Trump is set to re-enter the stock market as Digital World Acquisition Corp. shareholders approved a merger with his media venture.
The merger greenlight paves the way for Trump Media & Technology Group, home to the social networking platform Truth Social, to commence trading on the Nasdaq stock market.
Potential Delay in Cashing Out
Trump’s ownership stake in the combined entity is substantial, with nearly 79 million shares expected to be under his control. Based on Digital World’s closing stock price on Friday, Trump’s stake could be valued at approximately $3 billion, representing a considerable windfall for the former president.
However, Trump’s ability to cash out immediately may be curtailed by a “lock-up” provision, preventing insiders from selling newly issued shares for six months unless the company’s board intervenes.
The approval comes amidst a backdrop of legal challenges, including a hefty $454 million judgment in a fraud lawsuit, marking one of Trump’s most costly legal battles to date. Despite the potential financial gains, the former president’s presidential campaign remained silent on the matter.
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Trump Media’s Public Debut Spotlighted in Filings
Due in large part to investor excitement over the merger, Digital World’s stock has experienced notable volatility. Although there was a spike in the stock earlier this year, a sudden loss of over 14% on Friday suggests that there may be more volatility to come.
With this endeavor, Trump returns to the stock market after several financial losses, most notably the 2004 bankruptcy of his casino enterprise. A number of risks are highlighted in regulatory papers as Trump Media gets ready to go public, including Trump’s influence as a significant shareholder and the unpredictability of Truth Social’s financial performance.
Trump Media wants to make a name for itself in the social media space, and its board of directors includes prominent individuals including former US Trade Representative Robert Lighthizer, former Representative Devin Nunes, and Donald Trump Jr.
Since its February 2022 launch, Truth Social has gained recognition as a platform that supports Trump’s policies, even though its user base currently lags behind that of its main rivals.
Amidst ongoing legal issues and industry realities, Trump Media’s success is questionable as it gets ready to negotiate the complex social media world and the stock market.
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