Trump says 'I love Truth Social' one day after DWAC stock plunges on social media merger vote

[BumRushDaShow]

Source: CNBC

Published Sat, Mar 23 20242:29 PM EDT


Donald Trump on Saturday told his many online followers, “I LOVE TRUTH SOCIAL” — but shareholders in the newly merged company that will own that social media app might not feel so great after a sharp drop in price the day before.

The shell company Digital World Acquisition Corp. saw its share price plunge nearly 14% in the hours following shareholder approval Friday morning of a merger with the former president’s social media company to take it public.

If that drop accelerates in the coming weeks, the value of Trump’s majority stake in the newly merged company, dubbed Trump Media, could be a bit lower than the $3 billion or so estimated before shareholders signed off on the deal Friday.

DWAC’s stock, which hit a 52-week-high of $58.72 per share on Jan. 23 as the long-stalled merger appeared more likely to happen, had fallen to $44.20 per share as trading opened Friday morning just ahead of the shareholder vote. DWAC shares closed trading Friday afternoon at $36.94 per share.

Read more: https://www.cnbc.com/2024/03/23/trump-says-i-love-truth-social-after-dwac-stock-plunges-.html

[2naSalit]

1. Stock price will tank...

And he isn't going to make anything on the deal in the end. It won't be leveraged for the bond.

[Beartracks]

2. $3 billion-with-a-B?? For Truth Social?

Why?

==============

[localroger]

7. Meme stock effect

There are no fundamentals backing such a valuation, and it will bleed down to nothing as reality sets in.

[AZ8theist]

15. I doubt it's dollars. Probably pesos....

[EastBayGuy]

16. Right, or Rubles

[CountAllVotes]

24. Welcome to the Democratic Underground EastBayGuy!

I'm from there too!

Welcome!

[IbogaProject]

18. Hey it's -100 times that -31 million annual cashflow

It's only 3 to 5 times normal price to cash flow in these types of deals. I'm joking and not even really looking beyond that Duce Social lost 31 million last year.

[bluestarone]

3. To my way of thinking, THIS is proof of OVER PRICING his holdings.

Like he was accused of doing when he asked for loans. Am i right?

[Attilatheblond]

4. IOW, more fraud

He hasn't learned a thing, probably because no one has actually taken his court ordered fines from him. Oh, sure, he put up the bond to appeal the E Jean Carroll verdict, but he STILL thinks another court is gonna give it back on appeal.

He skated by for decades not paying contractors and nothing happened. He hasn't learned to stop frauding because it is still working for him.

One hopes NY AG James knocks that right out from under him. And soon.

[PortTack]

5. Tsf has no ability to tap into any money he might earn for at least 6 months...not gonna be worth much

By then.

[FBaggins]

11. He can if the board allows him to

It isn’t a law… it’s a corporate bylaw.

And soon he controls the board.

Also - he could borrow against it. A lender wouldn’t want to allow too much leverage because they might have to wait six months if they have to collect on it (and it’s likely to be volatile)… but 10% might not be a problem

[PSPS]

12. Yes, that's what this is all about.

It's rare but not unheard of for the board to grant an exemption. Trump could net a couple of billion out of this.

[Wonder Why]

6. The suckers will lose their shirts and blame Biden for their losses.

[4lbs]

8. Somebody, or something is getting "pumped and dumped".

Reminds me of all the boiler room hard-pressure get-rich-quick schemes that take billions from others and then leave them with worthless crap stock.

Junk Bond Junkets.

[Vinca]

9. Trump is the kiss of death for business. Merge with his company and go broke.

[Delmette2.0]

21. Yep. Everything TFG touches dies.

[EarthFirst]

10. Even the 84-page DWAC prospectus states:

“Trump may have interests that differ from yours and may vote in a way with which you disagree and may be adverse to your investor interest…”

[PortTack]

13. That's really interesting!! Why in gods name would they vote for that kind of business merger??!!

[FBaggins]

14. To acquire the app

The company was essentially created to facilitate this deal

[jgmiller]

17. Basically a legal pump and dump

DWAC has never had any real value and Truth Social is not profitable and Trump couldn't survive the SEC scrutiny to take it public so DWAC was createed to go public without any ties to Trump. It traded flat for almost 2 years then word of the merger hit his followers and they started buying shares of what is basically a shell company and drove the price up. They vote to merge with TS and suddenly on paper Trump has $3B. The problem is that he has a 6 month lockup where he can't sell the stock. Of course the board can (and will) vote to remove that lock up period but Trump still has a few problems. First no insitutional buyers are going to touch the stock and if he puts large blocks for sale the price will drop like a rock. The only way he can get value out of the shares is if he sells in small lots and hopes his MAGA followers keep buying them.

Something else to think about he can't really talk about the stock to his followers to get them to keep buying or it will be an illegal pump and dump. I don't think he's ever had the SEC coming after him so maybe he wants to add that to bingo card.

[SunSeeker]

19. DWAC's board of directors has Don Jr., Devin Nunes and Kash Patel on it.

What could go wrong?

[Red Mountain]

20. Another way

to fleece the rubes.

[lark]

22. Everything tsf touches dies, this is a fact!

Of course unTruth Social will tank, there was never any doubt.

[pfitz59]

23. Placing value on thin air

They can't even bottle and sell it. What a con job.

[LetMyPeopleVote]

25. DWAC soon to be TFG is a meme stock that relies on the greater fool/idiot theory

Meme stocks rely on the greater fool theory. I was amused to see that DWAC/Trump Media is classified as a meme stock where the value is due to personality and not due to the real value of issuer of the meme stock. This article is a good discussion of the meme nature of DWAC/TMT.
https://www.vanityfair.com/news/donald-trump-truth-social-media-merger

Trump’s financial future now hinges on some of the strangest fads in corporate finance—meme stocks, SPAC deals, and cult-of-personality investing. If Trump can find a way to act fast, it might just be the bailout he desperately needs.

Truth Social is a bad imitation of Twitter, where Trump was an unavoidable presence long before he ran for president. It’s chock full of stale red-pilled memes, MAGA conspiracy theories, and of course, Trump. That’s the main draw. Truth Social is the only place the former president now regularly posts his unfettered thoughts......

DWAC is best thought of as a meme stock. You may remember the meme stock fad from when retail investors on Reddit successfully coordinated a short squeeze with GameStop stock, before glomming onto a series of other millennial nostalgia brands like AMC Entertainment, BlackBerry, and Bed Bath & Beyond. Meme stocks are often publicly traded companies that attract an inordinate percentage of individual investors and their stock performance fluctuates in a way that’s significantly divorced from the reality of their underlying business. Combine those two trends and you’ll start to see why Trump’s media company could be valued at roughly $9 billion if it merges with DWAC.

Jay Ritter, a finance professor at the University of Florida, says meme stocks often depend on the “greater fool theory of investing,” meaning rational investors might buy in expecting the stock price to rise and betting that they can sell their shares to a greater fool willing to buy them at a higher price. In this case, however, Ritter speculates there is an inordinate number of individual retail investors compared to institutional investors, such as hedge funds, that normally own SPAC shares prior to a merger. “Here you’ve got ideology involved [too]—as far as I can tell, the vast majority of DWAC investors are Trump political investors, and they’re to some degree putting their money where their mouth is… My suspicion is most of them have bought the stock as a show of political support.” In this way, Trump is conducting yet another public fundraising from his supporters—this time through the public markets.

Idiots who purchase meme stocks are betting that they can get out before the other idiots figure out that the stock is worthless

[RockRaven]

26. Chump Trump has only One Pump, so

he's gonna thrust it as hard as he can, knowing it won't last...

[OAITW r.2.0]

27. We need to track DJT's share valuation......where's the floor? Truth Social is a walled garden cesspool. Trump's Xits?

Where is the value in this "merger"? Will it be around in, say, 6 months? A sucker's play, for sure...but Trump must be desperate at this point. Bet he's trying to lay off millions of shares, which he can't sell for 6 months.

[Scrivener7]

28. That price still nets him billions for perpetrating a scam.

[Blue Owl]

29. He's always loved a good fail

But how much longer can he fail upwards?