Donald Trump is making a comeback to the stock market, potentially receiving a substantial payout as a result.

The investors of Digital World Acquisition Corp. have agreed to a merger with Trump’s media company in a vote on Friday. This means that Trump Media & Technology Group, which is best known for its social media platform Truth Social, will soon be listed on the Nasdaq stock exchange.

Trump is set to own most of the combined company — or nearly 79 million shares. Multiply that by Digital World’s closing stock price Friday of $36.94, and the total value of his stake could be nearly $3 billion.

At this moment, the green light comes while the anticipated Republican candidate for president is dealing with his most expensive legal challenge yet: a lawsuit ruling of $454 million for fraud.

However, Trump will not have immediate access to the profits of the deal unless the company’s board modifies a “lock-up” clause that restricts company insiders from selling newly released shares for six months.

The presidential campaign of Trump did not promptly reply to the comment request.

If a shell company that is listed on the stock market agrees to acquire a private company, the private company will become listed on the stock exchange after approval from shareholders. Based on the current fluctuations in Digital World’s stock, it is possible that shareholders of Trump Media may experience turbulence.

Many of Digital World’s investors are small-time investors who are either fans of Trump or trying to cash in on the mania, instead of big institutional and professional investors. Those shareholders helped the stock more than double this year in anticipation of the merger going through. But on Friday, the shares lost almost 14%.

Trump’s earlier foray into the stock market didn’t end well. Trump Hotels and Casino Resorts went public in 1995 under the symbol DJT — the same symbol Trump Media will trade under. By 2004, Trump’s casino company had filed for bankruptcy protection and was delisted from the New York Stock Exchange.

Prior to Friday’s authorization, Digital World’s official documents included a multitude of potential hazards for its stakeholders, as well as for the holders of Truth Social, once Trump Media enters the stock market as well.

The company warned of a potential problem where Trump, as the main shareholder, could prioritize his own interests over those of other shareholders. Digital World also noted the high failure rate of new social media sites and Trump Media’s anticipation of ongoing financial losses.

The company Trump Media suffered a loss of $49 million in the first nine months of the previous year, with only $3.4 million in revenue and $37.7 million in interest expenses.

DWA’s shareholders also voted Friday to approve a slate of seven people, including the former president’s son, Donald Trump Jr., to hold seats on Trump Media’s board. Among the others are former Republican Rep. Devin Nunes, who would also be the company’s CEO; Robert Lighthizer, who served as Trump’s U.S. trade representative; Linda McMahon, who ran the Small Business Administration under Trump; and, Kashyap “Kash” Patel, a White House national security aide during the Trump administration.

Trump Media and Digital World first announced their merger plans back in October 2021. In addition to a federal probe, the deal faced a series of lawsuits leading up to Friday’s vote.

Truth Social made its debut in February 2022, which was one year after Trump was barred from popular social media platforms such as Facebook and Twitter due to the events on January 6th at the U.S. Capitol. Although he has been allowed back on both platforms, Trump has chosen to continue using Truth Social as a means to amplify his messaging.

On Thursday night, Trump announced his support for Truth Social on the social media platform. He wrote, “Truth Social is my platform for expressing my opinions and the true voice of America!!! #MAGA2024”

The number of users on Truth Social, a social media platform backed by Trump Media, has not yet been revealed. However, according to Similarweb, it had approximately 5 million active users on its mobile and web platforms in February. While this is significantly lower than popular platforms like TikTok and Facebook, it is still higher than other alternative tech platforms such as Parler, which has been offline for almost a year but is preparing to relaunch, or Gettr, which had fewer than 2 million visitors in February.

Entering the realm of the stock market will require Trump’s social media company to reveal additional information in the near future.

Private corporations are responsible to their owners, whereas public corporations are responsible to the shareholders who possess the company’s stock. Once it becomes a public company, Trump Media will have to disclose its quarterly financial statements and other significant news to government regulators.

Truth Social is dealing with similar issues as X, where traditional advertisers do not want to be associated with content containing hate speech or other contentious topics.

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Reporters from the Associated Press, Stan Choe and Barbara Ortutay from New York and San Francisco, respectively, provided contributions for this report.

Source: wral.com