Digital World Acquisition in a regulatory filing said its proposed merger with Trump Media and Technology Group — as well as the success of the merged enterprise, if it is approved — depends in part on the popularity of TMTG’s brand and the reputation and popularity of ex-president Donald Trump.
“Adverse reactions to publicity relating to Trump, or the loss of his services, could adversely affect TMTG’s revenues, results of operations and its ability to maintain or generate a consumer base, as well as the outcome of the proposed business combination,” the filing states.
Digital World is under federal regulatory scrutiny, including alleged insider trading related to a sudden spike in trading activity of the SPAC’s warrants before the deal was announced. Trump Media itself has been dogged by technical glitches and a delayed rollout, as well as sluggish sign-up activity on the social media platform Truth Social, the company’s signature product.
Truth Social has approximately 2 million monthly users, according to Earth Web. That’s less than 1% of Twitter’s 238 million daily users.
“According to The Hill, only 30% of people surveyed would use a social media site associated with President Trump,” the Digital World filing states. “In addition, according to a survey published in The New York Post, only 60% of Republicans would use such a platform. In order to be successful, TMTG will need millions of those people to register and regularly use TMTG’s platform. If President Trump becomes less popular or there are further controversies that damage his credibility or the desire of people to use a platform associated with him, and from which he will derive financial benefit, TMTG’s results of operations, as well as the outcome of the proposed Business combination, could be adversely affected.”
The SPAC next month is asking for shareholders to approve a one-year deadline extension to complete the deal. Read more.
