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Digital World Acquisition Corp. (DWAC) shareholders have formally approved the merger between the company and Trump Media & Technology Group. Axios Business Editor Dan Primack joins Yahoo Finance Live to discuss the future of his Truth Social after the deal closes.
Mr. Primack notes that Mr. Trump will receive a stock value of $3.5 billion. However, he has made it clear that these are paper shares, not actual cash, and the former president cannot sell the shares for six months. Given the company’s status as a meme stock, Mr. Primack said it’s unlikely Mr. Trump would borrow against his stock. He added that companies have historically performed “very poorly” after SPACs, further dispelling doubts that Trump would borrow against his company’s stock.
Primack noted that Truth Social’s future business strategy remains unclear, noting that the site is “purely an advertising business.” However, he acknowledged that the app currently has a “very large fan base.” [being] Most businesses. ”
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor’s note: This article was written by angel smith
video transcript
Josh Lipton: Former President Donald Trump’s Truth Social could become a public company as early as next week after shareholders finally approve a merger with Digital World Acquisition. The stock price fell more than 13% on the day.
Today we’re joined by Axios Business Editor Dan Primack. Dan, it’s great to have you on the show. First, Dan, let me explain to our viewers what this means for former President Donald Trump. That certainly sounds like Dan, so this could mean an incredible windfall for him.
Dan Primack: Yes, it’s pretty remarkable. You’re talking about billions of dollars for a company with single-digit million dollar revenues. Yes, Trump would have made a profit of almost $3.5 billion if this were true and this was published in the paper, if the merger were passed today.
Now, that’s the paper value, the stock value. As you can see on the chart, it has fallen. It fell about 14% today. So they will be about 2.9 billion.
But again, it’s $2.9 billion. Now, it’s a little difficult. It’s the value of paper inventory, not cash in the bank.
He has been locked up for six months. He cannot sell his stocks for six months. He may be granted an exception by the board. And the board includes his son and former members of his administration.
But there’s a bit of a dance there. That’s because if he sold a large number of shares, the value of his remaining shares would theoretically decline. Therefore, he will need to be careful about it. And there are questions about whether there will be enough market liquidity to conduct a large block sale.
Julie Hyman: Yes, and there’s also the question of whether he can borrow against his stock. But he would still need some sort of exemption.
Dan Primack: He would do that. And it would be surprising that someone would finance what could very well be a meme stock right now. Again, there’s not much underlying business at this point. And even if you put aside the assets themselves, going through a SPAC company, this goes public through a SPAC or a blank check company.
They have performed very poorly as a group in recent years. Therefore, for those who use this as collateral for a loan, the interest rate should be outrageous. Because lending based on this collateral is truly amazing.
Josh Lipton: And Dan, I’m just saying that Bloomberg is noting here that Trump Media lost $49 million in the nine months ending in September. His income was only around 3 million yen. What concrete prospects do you have for your future business strategy?
Dan Primack: Not really. We also don’t have numbers for last year’s fourth quarter, much less this year’s first quarter, obviously. Now it’s purely an advertising business. And I tell you. I was using the app last night. And I was kindly scrolling.
All I was receiving were Fed ads. I think there was probably an ad for Rumble. But other than that, the only ads I received from the Fed were for the Trump campaign. It is also unclear whether Truth Social is being compensated for these fees or in kind.
And today’s shareholder vote advertisement came from DWAC (SPAC). There was nothing else there.
Julie Hyman: Yeah, that’s interesting too. In fact, enrollment momentum has slowed. And as you can see pretty clearly from some of the information I saw quoted today, Similarweb says that the global average monthly visitor numbers have probably decreased or are decreasing in the last year. is.
And obviously, is this a real business? I think that’s kind of the question here, Dan.
At this time, that is not the case. Again, the first nine months of her last year. And remember that it was released at the beginning of 2012. So it’s not new from last year.
As Josh mentioned earlier, our sales in the first nine months were less than $3.5 million. That’s a small amount of money. I think there are people out there who made more than that in the first nine months of last year using Substack.
It’s not a lot of money. This is especially true since last year was also the year Donald Trump started his campaign and is constantly in the news. He never went to X or Twitter when given the opportunity by Elon Musk.
So there’s not much business at the moment. However, there is a very large fan base. Not just Trump, but stocks like meme stocks as well. I watched the shareholder vote today on a live rumble livestream that looked like someone was programming it.
The man was wearing a pirate suit. He took on the name of his stock, Captain DWAC. And thousands of people were watching.
Julie Hyman: Captain DWAC.
Dan Primack: Captain DWAC.
Julie Hyman: Thank you, Dan.
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