A chart of Digital World Acquisition Corp.’s stock price in the days leading up to and including shareholder approval of its merger with Donald Trump’s social media company.
CNBC
“I love the truth about social,” Donald Trump told his many online followers on Saturday — but shareholders of the new merged company that will own the social media app may not be feeling it after a sharp price drop the day before. Great.
shell company Digital World Acquisition Company Its share price plummeted nearly 14% in the following hours. shareholder approved a merger with the former president’s social media company Friday morning and made it public.
If the decline accelerates in the coming weeks, Trump’s majority stake in the newly combined company, known as Trump Media, could be worth slightly less than the roughly $3 billion estimated before shareholders signed the deal on Friday.
DWAC shares hit a 52-week high of $58.72 per share on Jan. 23 as the long-stalled merger seemed more likely, but had fallen to $44.20 per share by the opening bell ahead of the shareholder vote on Friday morning.
DWAC stock closed Friday afternoon at $36.94 per share.
The stock recovered slightly to $38.55 per share in after-hours trading. But that’s still 12.7% below Friday’s opening price.
The decline may reflect concerns about whether Trump Media Technology GroupThe companies that are merging with DWAC could eventually bring in significant revenue — and whether Trump will try to cash in his share early because of his many legal problems.
TMTG owns the Trump social platform, which Trump used on Saturday to express his love for the app. TMTG reported losses of nearly $50 million in the first three financial quarters of 2023. The company’s revenue during the period was less than $3.5 million.
Trump, meanwhile, faces civil legal judgments worth up to $500 million in federal and state courts in New York, in addition to mounting legal bills from those cases and four criminal indictments as he attempts to unseat President Joe Biden in the November election.
Over the past week, Trump’s lawyers said in a court filing that he did not have enough cash to secure an appeal bond to secure a $454 million fraud verdict in one of the cases. This currently prevents the New York Attorney General’s Office from claiming the award.
Under the terms of the merger, Trump will own at least 58% of Trump Media and is prohibited from selling shares in the company for six months.
However, the new board of directors, which includes his son Donald Trump Jr. and other close allies, may vote to lift that restriction, allowing him to sell stock more quickly to pay his legal fees.
This, in turn, could cause Trump Media’s stock price to fall and could cause other shareholders to sell their shares, further depressing the stock price.
Trump Media will use the ticker symbol DJT when it begins trading on the Nasdaq Stock Market as soon as next week.
Trump’s previous listed companies also used the same stock code. Trump Hotels & Casino Resortsits shares began trading on the New York Stock Exchange in 1995.
The company suffered operating losses every year and eventually filed for bankruptcy protection in 2004 and was delisted from the exchange that same year.
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