Donald Trump and Truth Social Will Go Public Via DWAC

Truth Social going public at a valuation of around $5 billion means its largest shareholder, Donald Trump, will add billions to his net worth.

Donald Trump’s social media company, Truth Social, will be going public via SPAC merger with Digital World Acquisition Corp (DWAC). DWAC’s board voted by majority to take the social media company public but it didn’t come easy. DWAC had to sue its former CEO, Patrick Orlando, to vote his 14.77% shareholding in favour of the merger, despite an ongoing compensation dispute.

Show Me The Money

Truth Social going public at a valuation of around $5 billion means its largest shareholder, Donald Trump, will add billions to his net worth. The move does seem very timely as the former president faces payment of a reduced $175 million bond to the New York Attorney General. However, DWAC shareholders can rest assured, as Trump cannot sell any shares for at least 6 months as per the merger agreement. Of course, there’s always the chance that the board could waive the share sale restriction but that would likely cause Truth Social shares to enter a free fall; so that whole scenario is quite farfetched.

DWAC Performance and Truth Social Stats

DWAC shares have been one of the fastest moving securities in 2024 as ‘in the know’ investors have been buying up shares in anticipation of this very event. DWAC shares have soared a meteoric 185% YTD and just yesterday shares jumped 35% as more market participants join the party. People have already made a lot of money on this security and there could be a lot more to be made if things go exactly as planned, but how often does that happen?

Truth Social itself has 5 million members and somewhere in the realm of 900k monthly active users, both of which are likely to grow considerably if Trump were to regain the presidency. In the first 9 months of 2023 the company reported a $49 million net loss on $3.38 million in revenue which makes a $5 billion valuation seem somewhat ludicrous, to say the least.

With that being said, Truth Social is every bit the megaphone for Donald Trump that Twitter (or X) is for Elon Musk, Trump’s being much cheaper (a Twitter clone that didn’t cost $44+ billion). Both of these figure heads have massive followings and both have sought to capitalize on that very fact. Whether or not Truth Social can grow its following will depend solely on Trump’s ability to grow his following and his ability to cater to his audience (through app additions and community). And contrary to popular belief, there’s a lot more than just die hard Republicans on the Truth Social app, a better representation of the audience would be “observant individuals who are challenging today’s societal norms”.

The Future

The stage is certainly set for Truth Social to be a lot more than ‘Donald Trump’s social media company with 900k monthly active users’. This could be a monumental shift in how public opinions are formed and thus how society is shaped. The $5 billion valuation for Truth Social today is overvalued but so is Nvidia, the only difference is that Nvidia is expected to triple its profit over the next 12 months (as judged by forward P/E ratios). If Truth Social was expected to triple total members and monthly active users over the next 12 months, all of a sudden that $5 billion valuation doesn’t seem so farfetched. And that just might happen if Trump gets elected President because a vote for him is likely a vote for Truth Social.