Former President Donald Trump, a white supremacist who barely knows how to use a computer, announced late Wednesday that he plans to launch a new social media platform next year called Truth Social, with beta testing opening up to select users in November. And while the site was almost immediately infiltrated by pranksters mere hours after the announcement—long before people were supposed to be allowed to even create accounts—that’s not the most interesting part of the story.
No, the most interesting thing about Trump’s planned social media platform is how it’s going to be used to make money. Because wherever Donald Trump goes, extremely shady business practices always follow. And it’s going to be very interesting watching MAGA investors almost certainly get fleeced by Trump’s new business endeavor, which is looking to go public through a special purpose acquisition company, or SPAC.
The business that’s launching Truth Social is called the Trump Media and Technology Group (TMTG), which has a business address listed as Mar-a-Lago but isn’t registered yet with the state of Florida, as far as Gizmodo can tell. TMTG is valued at $1.7 billion according to a very real figure tweeted by spokesperson Liz Harrington—something that surely wasn’t pulled out of the former president’s ass.
TMTG will be merging with a shell company called Digital World Acquisition Corp. for the sole purpose of getting listed on a stock exchange, according to the Wall Street Journal. That way, Trump Media and Technology Group gets to go public by piggybacking on a different company and Trump’s “media and technology” company gets to avoid a ton of regulatory hurdles that exist to keep companies somewhat transparent under the theory that investors are less likely to get screwed.
Here’s how the Wall Street Journal explains it:
Also called a blank-check firm, a SPAC is a shell company that lists on a stock exchange with the sole intent of merging with a private firm to take it public. The private company then gets the SPAC’s place in the stock market. SPAC mergers have exploded in popularity in the past year for many startups because they are allowed to make projections about their business. Those aren’t allowed in normal IPOs.
As the Wall Street Journal notes, investors in any SPAC have the right to pull their money out before a deal is finished. And the newspaper hints that such a thing could actually happen with Trump’s SPAC deal.
Again, from the Wall Street Journal:
The Digital World Acquisition SPAC has about $290 million on hand. Mr. Trump’s firm could use the money held by the SPAC to fund its growth, but that cash pile could shrink. That is because SPAC investors have a right to pull their money out of the deal before it is completed. Such withdrawals have skyrocketed in recent months, with shares of many SPACs falling after some companies that went public this way struggled to meet their growth targets.
But consider us skeptical that diehard Trump supporters, of which there are too many, will pull out their money, even if things are obviously going south. One of the strengths of Trump’s brand is that people who believe in his anti-democratic cause will likely be investing for reasons beyond money. Trump supporters have given the former president millions of dollars in campaign contributions and if there’s a private cause Trump is advertising, they’re likely to give him even more.
In this case, the private cause is a fight against Big Tech companies like Google, Facebook, and Twitter. And if Trump himself makes a little money along the way, will Trump’s legion of pro-fascist followers really mind?
But Trump better get a move on if he wants to milk his new company for all it’s worth. As the Harvard Business Review recently wrote, the SPAC bubble could burst at any time. And a study from last year showed that the share price of the vast majority of SPACs fell after their merger.
Normally, we’d be extremely wary of shady SPAC deals with unproven companies, but this is a special situation. Anyone who invests in Trump or his shell company know exactly what they’re getting into. If you support former President Trump, we encourage you to dump all your money into Trump Media and Technology Group. You’ll get everything you deserve.