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Trump’s Truth Social on the Brink of Collapse?

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Trump’s Truth Social on the Brink of Collapse?

In recent days, the fate of Donald Trump’s ambitious venture, Truth Social, hangs in the balance. The outcome of a critical vote, set to take place later this week, may determine whether this right-wing Twitter alternative survives or succumbs to dissolution. As reported by the Washington Post on September 2, Truth Social is standing at the precipice of uncertainty.

Trump's Truth Social
Trump’s Truth Social

The Genesis of Truth Social’s Uncertain Future

The narrative surrounding Truth Social’s future commenced back in October 2021 when Trump Media & Technology Group (TMTG), the platform’s parent company, unveiled its intention to merge with Digital World Acquisition Corporation (DWAC), a Miami-based entity. The primary objective of this merger was to take TMTG public through a Special Purpose Acquisition Company (SPAC) arrangement. Initially, the two companies were allotted a window of 12 to 18 months to finalize their merger. Over time, this deadline has seen multiple extensions and is currently slated for September 8, 2023. In a last-ditch effort to secure more time, a shareholder meeting is scheduled for September 5, with hopes of gaining approval for a one-year deadline extension.

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Traditionally, votes to extend deadlines in SPAC deals have been routinely approved, mainly due to the participation of large professional and institutional investors. However, DWAC’s shareholder base is predominantly composed of smaller retail investors who may have invested based on loyalty to Trump or his brand rather than an awareness of the impending merger deadline. This unique shareholder composition raises doubts about the extension’s success, as highlighted by Jay Ritter, a finance professor at the University of Florida, in his comments to the Washington Post.

Should the extension vote fail, DWAC will be legally obliged to liquidate its assets and return $300 million to its shareholders, effectively leaving Trump’s company in a precarious position.

DWAC’s Plea for Extension Approval


Eric Swider, the CEO of DWAC, conveyed a compelling message in an August 16 regulatory filing, urging shareholders to vote in favor of the extension. He emphasized the critical role this decision plays in upholding the values of free speech, innovation, and growth, which are fundamental to both DWAC and TMTG’s vision. Swider’s plea underscores the significance of the impending vote for the future of Truth Social.

Numerical Insights into the Truth Social SPAC Deal

  • Initial enterprise valuation of TMTG: $875 million (per regulatory filing), with potential for growth depending on stock performance, potentially reaching $1.7 billion.
  • DWAC’s cash reserves at the time of the merger announcement: $293 million.
  • TMTG’s expected cash infusion from DWAC upon successful merger: $1.3 billion.
  • Capital withdrawn by previously interested investors: $138 million.
  • Trump’s followers on Truth Social: 6.4 million, in contrast to his nearly 87 million followers on Twitter.
TMTG : Trump's Truth Social parent Company
TMTG : Trump’s Truth Social parent Company

A Brief Timeline of DWAC and Truth Social’s Merger Journey

  • January 2021: Trump is banned from Twitter following the Capitol Hill incident. He establishes Truth Social as an alternative.
  • October 2021: DWAC shares surge by 400% due to online forum speculation, becoming a meme stock. However, it later faces scrutiny for failing to disclose talks with TMTG to the SEC from May to October 2021.
  • November 2021: Senator Elizabeth Warren calls for an SEC investigation into DWAC’s potential securities violations.
  • February 2022: DWAC shares surge by nearly 30% as Truth Social debuts on Apple’s App Store.
  • June 2022: TMTG faces a subpoena in a criminal investigation related to its attempt to go public through DWAC.
  • August 2022: Google bans the Truth Social app due to inadequate moderation policies. Calls for Apple to remove the app from its store escalate, but Apple continues to allow it. Separately, DWAC seeks shareholder approval for up to four three-month extensions.
  • September 2022: After securing funding from corporate sponsor ARC Global Investments II, DWAC extends its deadline by one year.
  • October 2022: DWAC postpones a shareholder meeting to November 3 after failing to garner enough support for a 12-month extension. Truth Social returns to the Google Play Store.
  • March 2023: Patrick Orlando, the chair and CEO of DWAC, is removed from his positions.
  • June 2023: A former DWAC board member is arrested on insider trading charges.
  • July 2023: DWAC agrees to an $18 million settlement to resolve charges of misleading investors and providing false information to the SEC.
  • August 2023: DWAC cites unreadiness to file required quarterly financial reports for the first half of the year and warns of potential delisting by Nasdaq if reports aren’t submitted by November.

Trump’s Return to Twitter and Affirmation of Truth Social

Interestingly, Trump, who regained access to his @realDonaldTrump Twitter account a month after Elon Musk’s acquisition of Twitter, has rekindled his engagement on the platform. However, on August 25, he affirmed his commitment to Truth Social in an all-caps proclamation, declaring it as the foremost platform of communication in America and the world today.

In conclusion, the future of Trump’s Truth Social is hanging by a thread, with a crucial vote determining its fate. As the September 8 deadline looms, the world watches closely to see whether this controversial social media platform can navigate its way back from the brink of collapse.

Source: Quartz

Additional Information

Digital World Acquisition Corp (DWAC)


Digital World Acquisition Corp (DWAC) is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. While DWAC initially aimed to focus on companies in the healthcare industry in the United States, it is currently not engaged in any business operations and has not generated any revenue. Key figures at DWAC include Frank Andrews (Chairman of the Board), Eric Swider (Chief Executive Officer, Director), Alexander Cano (President, Company Secretary), and Katherine Chiles (Chief Financial Officer). The company’s address is 5910 Pacific Center Blvd., Suite 300, San Diego, CA 92121, United States. (Source: CNBC)

Trump Media & Technology Group (TMTG)

TMTG : Trump's Truth Social parent Company
TMTG : Trump’s Truth Social parent Company

Trump Media & Technology Group (TMTG), also known as T Media Tech LLC, was founded in 2021 by former U.S. President Donald Trump. TMTG made headlines when it announced a merger agreement with DWAC, a publicly traded special purpose acquisition company, in October 2021. As of April 2023, Trump owned approximately 90% of the company, and former U.S. representative Devin Nunes served as the Chief Executive Officer since January 2022. TMTG launched the social network Truth Social in February 2022. Notably, Trump reported earning less than $201 from TMTG in a personal financial disclosure. (Source: Wikipedia)

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