Former President Donald Trump's Truth Social network has a chance to generate billions of dollars in stock value for him on its Wall Street debut.
However, it is unlikely that the former president will be able to immediately access the funds, unless specific conditions are changed as the future prospects of the business are unsure.
Trump May Reap Billions in Truth Social Stock Market
According to Trump's company, it anticipates ongoing financial losses, and there are indications that its value may be far less than what the stock market indicates.
A combination is on the horizon as Digital World Acquisition Corp., owned by Donald Trump, gets ready for a partnership with Trump Media & Technology Group (TMTG), the company responsible for Truth Social. If shareholders give their approval, TMTG may soon have its stock listed on the Nasdaq, taking Digital World's spot.
Digital World operates as a special purpose acquisition company (SPAC), raising funds and actively seeking potential companies for mergers. SPACs provide a potentially faster and more convenient avenue for target companies to list their stocks on the New York Stock Exchange or Nasdaq, bypassing certain administrative processes typically involved in traditional initial public offerings of stock (IPOs).
There will be a good chance of a successful vote, given an enormous rise in Digital World's stock price, which can be attributed to the anticipation surrounding Trump. The closing cost on Thursday stood at $42.81 per share, with a remarkable year-to-date increase of nearly 145%, surpassing the modest 10% gain of the S&P 500 index.
An important portion of Digital World's investor base is made up of individual investors who have shown support for Trump or are looking to take advantage of the excitement, rather than being mainly made up of large institutional and professional investors, according to AP News.
Trump's Share
The collaboration between Digital World and TMTG is expected to result in a continuation of stock trading under Digital World's ticker, DWAC, for a period of time that can range from a few days to a few weeks.
Companies involved in SPAC deals typically make a declaration regarding the commencement of trading their stock under a new ticker symbol. The company associated with Donald Trump is seeking to trade using the ticker symbol DJT, which represents the initials of the former president.
The majority of the new, combined company will be owned by Trump, with almost 78.8 million shares, representing a stake of at least 58%. The total value could potentially exceed $3 billion, considering Digital World's current stock price of over $40.
However, selling won't be an easy endeavor for him for the next six months. This is due to a "lock-up" provision, a typical restriction on Wall Street that prevents essential early investors from quickly offloading their shares.
There is a possibility that the lock-up agreement could be given up by Digital World prior to the deal's finish, or the new company's board may decide to modify the lock-up agreement once the deal is finalized.
This decision by the board might subject those directors to legal scrutiny. Still, if the success of the company hinges on the value of Trump's brand, relaxing the lock-up agreements could potentially protect that brand.
This would present a more compelling argument that might prevent board members' lawyers from being immediately dismissed in court, ABC News reported.
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