Donald Trump may be finally headed for Wall Street.
The Securities and Exchange Commission has signed off on one of the last outstanding hurdles to a more than two-year-old planned merger to take the former president’s media venture public, according to the companies behind the deal, Trump Media & Technology Group and Digital World Acquisition Corp.
Now, pending final approval from investors, Trump Media would join the ranks of thousands of other public companies trading in the U.S. The deal could inject some $300 million into the company, which operates Trump’s social media bullhorn, Truth Social. And Trump himself will gain a major stake in the company.
“I never thought it would get to this point,” said Julian Klymochko, CEO of Accelerate Financial Technologies, which operates a fund focused on so-called blank-check companies like Digital World that seek to acquire private companies to take them public. “Deals die on the vine, but this one somehow managed to survive despite seemingly everything going against it.”
The SEC’s green light is a surprising turn for the beleaguered deal — injecting new hope into Trump’s next act in business, just as the presumptive GOP nominee’s campaign against President Joe Biden heats up.
Shares in Digital World Acquisition Corp., or DWAC, skyrocketed more than 25 percent on the news Thursday.
Since the beginning, the planned union has been mired in regulatory issues, market volatility and looming deadlines that have posed existential threats to the deal.
The SEC began investigating the transaction soon after its unveiling in late 2021, resulting in insider trading charges against a trio of Florida men involved in the deal as well as a separate settlement with Digital World over the company’s disclosures. Digital World agreed to pay $18 million last year to resolve the allegations.
Executives for Digital World and Trump Media have had to push investors repeatedly for more time to complete the deal.
“We are immensely proud of the strides we’ve taken towards advancing the Business Combination,” Digital World CEO Eric Swider said in a statement announcing the SEC’s approval of the deal’s so-called registration statement. “This achievement marks a significant milestone for us.”
The companies expect to schedule a final shareholder vote on the deal in the coming days, according to the statement. But observers of the deal including Klymochko say the vote is likely a formality at this point, with shares in the combined company set to possibly start trading as soon as next month.
Led by Devin Nunes, the former California member of Congress, Trump Media outlined a lofty business plan when it launched. But the company’s primary operations today revolve around Truth Social, a Twitter lookalike that touts an “open, free, and honest global conversation without discriminating on the basis of political ideology.”
In the three months ended Sept. 30, 2023, Trump Media brought in $1.1 million of revenue compared with a little more than $203,000 in the same period of the previous year, according to a regulatory filing. Still, the company recorded a net loss of more than $26 million for the quarter.
Combining with Digital World could give Trump Media a new cash windfall of millions of dollars — and possibly more from certain institutional investors.
The deal, if completed, will make Trump the combined company’s largest investor with more than 78 million shares. That could mean he would hold as much as 69 percent of the outstanding stock, though he will not be able to sell the shares for several months after the deal closes.
A new board for the combined company would also be set up, featuring the former president’s son Donald Trump Jr., one-time U.S. Trade Representative Robert Lighthizer and the former head of the Small Business Administration, Linda McMahon, according to another filing.
Still, Trump Media is not without risks. Entering the public markets would open the company up to new scrutiny from regulators, investors and the public. And the company’s success hinges in part on Trump’s own — a potentially daunting scenario considering the former president’s legal woes.
News of the SEC’s sign-off was soon followed by a New York judge’s declaration that Trump’s first criminal trial will begin on March 25.
In the filing, Trump Media itself pointed to external surveys highlighting muted interest among voters, including Republicans, in using a social platform platform tied to Trump.
“In order to be successful, TMTG will need millions of those people to register and regularly use TMTG’s platform,” the company wrote. “If President Trump becomes less popular or there are new 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 could be adversely affected.”
Yet for many investors, the interest in Trump Media is more about Trump than the company itself.
“Up until this point, there’s been a lot of hype, excitement and trading on the Trump name and persona,” University of Georgia law professor Usha Rodrigues said. “The whole DWAC story has shown us that there is a piece of the market that will buy because he says buy.”
