Donald Trump’s social media company has moved one step closer to a potentially highly lucrative public offering via a merger with a shell company after investors in the blank-cheque acquisition firm voted to approve the deal potentially worth billions.

Shares in Digital World Acquisition Corp (DWAC) have risen just over 111 percent this year as of their close on Friday.

The shares, which have vacillated greatly in price, were down nearly 14 percent by the end of the day as traders took profits from the news of the vote earlier in the day.

DWAC announced its intention to merge with Trump Media & Technology Group (TMTG) and take it public in October 2021, but the deal has since then been mired in challenges including charges of insider trading.

Legal challenges

Last July DWAC reached an $18 million (£14m) settlement with the Securities and Exchange Commission over charges the company misled investors by failing to disclose before its public offering that it was planning a merger with the Trump group.

Based on DWAC’s recent stock trading price, the deal would make it worth some $5.7bn after the merger, with Trump holding about 60 percent of the shares, worth some $3bn.

Trump would not be able to sell his shares or borrow against them for six months without a waiver from the executives in charge of DWAC, who are Trump supporters.

The company’s shares have skyrocketed in value as Trump’s political supporters have banded together to buy the stock in a way similar to how small traders networking over social media drove up the price of GameStop during the pandemic.

Financial windfall

DWAC’s shares have risen steadily this year as Trump has moved closer to gaining the Republican nomination ahead of US presidential elections in November.

Trump is in need of cash amidst numerous legal challenges, including a $454m judgement against him in a civil case.

TMTG’s principal service is the social network Truth Social, which had 8.9 million sign-ups as of February, DWAC said, compared to half a billion monthly users for X, formerly Twitter, according to owner Elon Musk.

Some 6.7 million of those Truth Social users are followers of Trump’s account, compared to the more than 88 million he had on X when he was suspended.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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