Shares of Trump Media & Technology Group (TMTG), which includes the Truth Social social network and in which former US President Donald Trump has a majority, debuted on the New York Stock Exchange with a strong rise. They gained as much as 45 percent on the Nasdaq market shortly after the opening bell, stock exchange records showed. TMTG entered the stock market through a merger with publicly traded firm Digital World Acquisition.
Market Performance and Trump’s Stake
TMTG’s share price rose above $72, bringing the firm’s market capitalisation to $9.84 billion, Reuters reported. Later, the price rose above $79 before returning below $70. Trump holds nearly 60 percent in the company, bringing the value of his stake to more than $5.7 billion.
TMTG completed its merger with Digital World on Monday, more than two years after announcing its intention to merge with the company. Digital World was one of the so-called SPACs, or firms that specialize in acquisitions. These companies do not have commercial activities at the outset and their purpose is to seek investment opportunities. When they find a suitable company, they will team up with it and take it to the public market at minimal cost and without a lengthy approval process. Thus, TMTG has now taken the place of Digital World on the Nasdaq market, trading under the symbol DJT.
Stock Price Movement and Financial Status
Digital World’s stock price more than doubled this year, leading up to Friday’s shareholder vote on the merger with TMTG. After Friday’s vote, the price plunged nearly 14 percent, but by Monday the stock had rebounded, up 35 percent.
TMTG lost $10.6 million in the first nine months of last year and reported a loss of $23.2 million in 2022. Its social network Truth Social launched in February 2022 and has not yet disclosed the number of users. Research firm Similarweb estimates that Truth Social had roughly five million active users in February. This is significantly less than TikTok, which has two billion users, or Facebook with three billion users. But it’s more than, say, the Gettr network, which had fewer than two million users in February.
Investor Risks and Regulatory Challenges
The merger will have a number of risks for investors, according to documents filed by Digital World with regulators. One is that Trump, as the majority shareholder, will have the right to vote in his own interest, which may not always be in the interest of all shareholders. New social media platforms also tend to be unsuccessful and TMTG is expected to be loss-making for the foreseeable future. Trump, who is seeking a return to the White House, is now using Truth Social as his main platform to reach voters.
The firms first announced the merger agreement in October 2021. Since then, however, the deal has faced a number of hurdles and delays. Digital World has also been the target of investigations by the U.S. Department of Justice and the Securities and Exchange Commission (SEC). According to the SEC, the firm misled investors when it concealed in documents that it had developed a plan to take over TMTG and had pursued the acquisition prior to its initial offer. Last July, Digital World agreed to an $18 million settlement with the Securities and Exchange Commission.
Source:čtk
