Some investors don’t wait to see if the plans of former President Donald Trump for a media company that would challenge Facebook, Twitter, and Disney can become a reality. They’re all in.
Trump announced Wednesday that he will launch Trump Media & Technology Group to challenge the Big Tech companies who have closed him out and denied him access to the megaphone that was crucial to his rise to national prominence. This announcement was made nine months after Trump was expelled from social media for inciting the Jan. 6, Capitol insurrection.
The new venture claimed it was created by a merger of Digital World Acquisition Corp. and seeks to be publicly listed. Even though the deal is close and the venture becomes a legitimate media outlet, Digital World Acquisition shares quadrupled their value on Thursday afternoon trading.
“It’s been many, many months since there’s been a SPAC merger greeted with this amount of enthusiasm,” said Jay Ritter, a professor at the University of Florida who specializes in initial public offerings.
Since he was banned from Twitter and Facebook, Trump has talked about starting his own social media website. After the page received dismal views, a previous attempt to launch a blog was abandoned.
“We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American President has been silenced,” he said in a statement. “This is unacceptable.”
Conservative voices are able to do well on traditional social networks. According to a daily report compiled by an internet studies professor and a New York Times technology columnist using Facebook’s data, 50% of Facebook’s top 10 link posts on Wednesday were from conservative media, commentators, or politicians.
TMTG is not lowering its sights. The company claims that it plans to launch the Truth Social app next month, with a national rollout in the first half of next year. Additionally, TMTG+, a video-on-demand service dubbed TMTG+, will offer entertainment programming, news, and podcasts.
A slide from a TMTG presentation is a graphic showing TMTG’s possible competitors. These include Facebook, Twitter, Netflix, Disney+ and CNN. This slide also suggests that TMTG will be a major in cloud computing and payments over the long term and will compete with Amazon, Google, Microsoft, and Stripe.
TMTG also pokes fun at Trump’s favorite social network. The Truth Social preorders listing in Apple’s app store shows slides that show a social network that resembles Twitter down to the short messages and user handle preceded by “@”.
These same graphics also show Jack’s Beard, a user who fumes at an employee for refusing to delete a user or its posts. Dorsey’s scraggly hair has been a focal point of attention during his Zoom congressional appearances.
Truth Social’s terms and conditions of service forbid users from irritating any site employees or from making statements that “disparagement, tarnish, and otherwise harm, in unsere opinion, us/or the Site.”
Trump-branded social media platforms would be welcomed into a space that is dominated by Big Tech-run portals such as Twitter and Facebook. TMTG’s offering does not have to attract users from other platforms to succeed.
“This network will most likely be most successful in targeting far-right users, the same that left Facebook for ‘alternative’ social networks like Gab or Parler,” said Alexandra Cirone, assistant professor in government at Cornell University.
Trump’s new media bid could also compete for viewers on conservative networks such as OANN, Newsmax and Fox News, she said.
Cirone stated that Trump’s social media app could be a “new venue for fake news or extremism” after Apple and Google cracked down on apps that violate their content guidelines.
Digital World Acquisition Corp. is a Miami-based special-purpose acquisition firm or SPAC. These publicly traded companies allow for a faster listing of shares than traditional initial public offerings. This means that the SPAC acquires private firms and changes their name and other details to match the acquired company.
SPACs purchase their acquisitions using cash from the company’s initial public offering. According to a filing filed with the Securities and Exchange Commission, DWA’s September 8 IPO raised $287.5 Million.
DWA stated that it raised approximately $293 million in cash. This money will be used to expand TMTG’s ventures. According to an SEC filing, several institutional investors are among the company’s largest shareholders, including Lighthouse Investment Partners and D. E. Shaw & Co. as well as Radcliffe Capital Management. DWA stated that more information about the deal would be made public in future filings.
According to the release, the deal has an $875 million initial enterprise value. This measure takes into consideration a company’s total assets and debts. The deal still needs approval from shareholders of DWA and TMTG as well as regulators.
DWA’s CEO is Patrick Orlando. Orlando is a Miami-based founder of an investment company. He has also worked at JPMorgan, Deutsche Bank, and before joining a biofuels venture. According to a recent regulatory filing, Orlando holds 18% of Digital World stock.
Shares of Digital World Acquisition soared $33.06, or 332%, to $73.02 in afternoon trading.