Donald Trump’s astute investigation into new media firm deal comes as no surprise

The SEC’s interest may have been sparked by a New York Times report that DWAC promoters met with Trump in March, about six months before the deal was announced. DWAC was listed in September and the deal was announced in October.

SPACs are not allowed to have a specific acquisition in mind when raising funds to prevent vehicles from being used to circumvent onerous disclosure requirements and investor protections involved in a conventional IPO. . It usually takes several months, and sometimes years, before a SPAC identifies its target.

DWAC had always said, in documents filed with the SEC prior to the announcement of the deal with Trump, that neither it nor its executives had engaged in “substantive discussions, directly or indirectly” with a target company.

The SEC may also have been prompted to act by a letter from influential Democratic Senator Elizabeth Warren last month, in which she asked the agency to investigate the deal for potential securities violations and asserted that the so-called early talks between DWAC and Trump had resulted in “making big investors richer while trapping retail investors in a market bubble.”

There is no doubt that big investors would be enriched if the deal went through or that a DWAC stock bubble has inflated.

TMTG, when the deal was announced, was essentially just an empty shell, with the only relevant assets being the Trump brand and a dormant social media site, “Truth Social,” which uses code snapped from Mastodon, an open source social network. There was supposed to be a beta launch of the site last month, but nothing happened.

Senior Senator Elizabeth Warren implored the SEC to investigate the deal.Credit:PA

If the deal goes through, into that shell DWAC’s money and the billion US dollars raised from the anonymous group of investors this weekend will flow. If all goes according to plan, TMTG, then about 66% owned by Trump, would have over $ 1.25 billion in cash.

It could be a much more rewarding deal for Trump, promoters and investors, however, as they get their shares at a valuation of US $ 10 each. That billion US dollars pledged by investors last weekend would suddenly turn into 50 billion US dollars, for example, if the current DWAC share price holds.

The billion US dollars raised this weekend is called a PIPE (private investment in a public entity) deal. While in most PSPC deals, PIPE investors have to wait at least a few months after the deal closes, DWAC and TMTG have told their new investors that they can sell their shares as soon as the deal closes.

At current price points – or even at much lower prices – PIPE investors could make huge profits by selling as soon as the deal is closed.

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Despite Trump’s lack of success in trying to build a social media presence after being banned by Twitter and Facebook after the January 6 violence on Capitol Hill – he started a blog to shut it down less than a month later due to the lack of an audience – TMTG has very optimistic ambitions.

He wants to take on Twitter, Facebook, Amazon, Netflix, Disney, CNN and other tech and media giants in the hopes that Trump can get audiences for the missive – he says 146 million followers – he had. formerly on social networks to its planned social networks. and streaming platforms.

In a presentation on its website, TMTG has revenue projections that show it would have $ 3.7 billion in revenue in 2026 if it could attract 81 million users to its social network and monetize 21 million to an average income per user of $. $ 13.50 while also building a base of 40 million subscribers paying $ 9 per month for its streaming service.

Even if the platforms are never built or revenue forecasts are never met, the insiders of this deal, if done, are going to make tons of money and Trump will end up controlling a huge amount of money. silver. Now that is the art of the business!

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Cathy W. Howerton