Donald Trump’s new digital venture may reach four times the value of his fortune

Donald Trump (Reuters) (KEVIN LAMARQUE /)

The fortune that the tycoon and former president Donald Trump accumulated throughout his 75 years, between juicy inheritances and millionaire real estate deals, would be dwarfed by the value of your new business, focused on the world of social networks and that has received the accolade of numerous investors in the stock market.

The exact amount of Trump’s accounts, among his large assets and large debts, has always been shrouded in mystery. According to the magazine Forbes, his fortune amounts to USD 2,500 million. That would be just a fraction of what Trump Media and Technology Group (TMTG) would be worth, which Without having entered the ring, it is already valued by investors at up to USD 10 billion.

In October, Trump announced the launch of TMTG and that its first product will be the new social network “TRUTH Social”, seeking to serve conservative users who were upset with Facebook and Twitter, networks that expelled the former president for spreading false news and his role in the attack on the Capitol. As he advanced, his mission is to “create a rival to the progressive media consortium and fight the ‘Big Tech’ companies of Silicon Valley.” The potential is clear: millions of Republican supporters who could join you on a new platform.

While Trump Media shares cannot yet be purchased, The firm partnered with Digital World Acquisition Corp, a company known as a SPAC. It stands for entities with a special purchasing purpose, known as “blank check” firms, and they serve as financial vehicles for trading on the stock market. News of the merger sent shares soaring from $ 10 to $ 60, with much higher peaks. Transactions with the company’s securities were so intense and the price swings so pronounced that they were temporarily suspended at least 12 times that day.

As calculated by Forbes, if the stock remains at $ 60, the shareholders of this SPAC will keep a stake estimated at $ 2.2 billion. In turn, another group of linked investors would stay with other USD 300 million. For their part, the owners of the company would receive some 86 million shares, valued at $ 5.1 billion. Forbes adds that if the stock remains above $ 30 in the 45 days after the merger, owners will receive another 40 million shares, priced (if the price holds) at USD 2.4 billion.

All this adds up to $ 10 billion, four times the value of Trump’s fortune..

Fervent supporters of Trump, the source of investor confidence (Reuters)
Fervent supporters of Trump, the source of investor confidence (Reuters) (RACHEL MUMMEY /)

“Trump and his fellow shareholders could come away with a really big payout,” said Jay Ritter, a University of Florida professor who specializes in initial public offerings, though warned that stocks could fall. “At some point the company needs to make a profit, and given the competitive nature of the media industry, that could be a stretch.”

The current valuation is far from certain. Ritter warned that if Trump’s bonus shares are issued, they would dilute existing shareholders, which would weigh on the share price. Furthermore, whatever Trump’s stake in the new company (in which he is listed as president), he will not be able to sell his shares immediately. A “lock-in” clause in the application says that it will not be able to sell them until at least five months after the merger.

The volatility of Digital World stocks is a reminder to investors of the risks of investing in SPAC, companies whose shares have a history of ups and downs.

Even with the new October presentation, Investors Still Know Almost Nothing About Trump’s New Company. He has given few details on who exactly will run the day-to-day operations and no financial figures. In November, there was a testing stage and in a matter of hours some users had created accounts with the names of Donald Trump and former Vice President Mike Pence and shared profane content, before the platform is decommissioned until a future launch.

Also, there is an unfavorable precedent for conservative networks. When Trump was banned from the biggest platforms, a part of his followers turned to the Parler network (which does not prohibit hate messages or fake news), but it was banned by Google, Apple and Amazon.

Ritter, an IPO expert, said Trump’s valuation of the company is remarkable given that the company has disclosed so little and has virtually no assets. “But you obviously have a great brand that is potentially worth billions of dollars.“, said.

The company documents also acknowledge the “controversial nature” of a company associated with Trump and his family. And it says it is taking action should Trump run for president again. He says the new company is structuring Trump’s “ownership and position” in a way that eliminates the need for disruptive changes in the event that Trump decides to run for public office or is convicted of a felony.