Status: 07.09.2022 09:21 a.m
The stock market debut of Trump’s social network Truth Social is in danger of failing. Time is running out for the takeover vehicle that the Twitter clone wanted to use to go public.
Barely a year after its founding, Donald Trump’s social network Truth Social is threatened with a serious setback. The planned IPO is about to end. Trump wanted to use a stock exchange vehicle, a so-called SPAC (Special Purpose Acquisition Company), called Digital World Acquisition. This should take over the Trump Media & Technology Group (TMTG) and bring it to the stock exchange.
SEC blocks takeover of Trump’s company
But the US Securities and Exchange Commission has put the takeover of TMTG on hold due to ongoing investigations. Namely, the circumstances under which Digital World selected the Trump company are the subject of civil and criminal investigations. It’s about $1.3 billion that TMTG is supposed to receive from Digital World in the course of the “backdoor IPO”.
However, SPACs only have a limited lifetime if they fail to achieve adoption. Digital World has therefore asked its shareholders to extend the acquisition period for Trump Media & Technology Group (TMTG) by twelve months.
Will Trump’s dream burst on Thursday?
Just yesterday, Digital World boss Patrick Orlando extended the voting period by two days. He needs a majority of 65 percent to prevent the company from being liquidated. In other words, if Digital World shareholders don’t agree to the extension, Trump’s dream of a Truth Social IPO could burst tomorrow.
In fact, Digital World appears to be having great difficulty getting investors to vote. Most are private investors who are difficult to reach. As of Monday evening, Digital World was far from the required approval rating, several insiders told Reuters news agency.
Further funding of Trump Media & Technology Group pending
If the vote is defeated, the management can continue to operate Digital World for six months. But the promise of the new truth social investors over one billion dollars is only valid until September 20th.
Without the IPO, the further financing of TMTG is also open. According to Digital World, the money will last until April 2023. TMTG said last week that Truth Social was on a strong financial footing.
Especially right Trump fans on Truth Social
Trump founded Truth Social in October 2021 after being banned from major online platforms Twitter, Facebook and YouTube as a result of the January 2021 storming of the US Capitol. The announcement caused a lot of hype among supporters of the ex-US President and investors at Digital World.
The app eventually launched in the US a few months later, in February 2022. A good six months later, the platform is used “almost exclusively” by right-wing Trump supporters, emphasized the expert David Thiel from the Stanford Internet Observatory. Trump recently had four million followers on Truth Social – far fewer than the 89 million who subscribed to his posts on Twitter.