- Oct 17, 2011
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The Securities and Exchange Commission has approved the merger proposal of former president Donald Trump’s media start-up with a special purpose acquisition company, a critical step for a long-delayed dealTruth Social investors agree to pay $18 million fine
The SEC had been investigating whether DWAC executives held merger discussions with Truth Social's parent company before its initial public offering in 2021, which isn't allowed, and the firm would be required to pay an $18 million penalty after the closing of a merger.
On paper, this means Trump's stake in the company is worth something like $4 billion.
Jay Ritter, a finance professor at the University of Florida, said the windfall is “paper wealth … with the emphasis on ‘paper,’ since his [Trump Media] shares cannot currently be sold.”
Ritter said that in his opinion the merged company’s valuation — roughly $9 billion, based on Digital World’s current price — is out of sync with the Trump company’s financial performance. Trump Media generated $3.4 million in revenue and lost $49 million during the first nine months of 2023, Digital World said in a recent SEC filing.
Trump Media is “a money-losing company that generates less than $5 million per year,” Ritter said. Digital World, he said, is in his view “a classic meme stock, whose price is totally unrelated to the underlying fundamentals.”
On the plus side (for Trump) there's a sucker born every minute. If his fan base keeps the stock price elevated, he can make a mint once he's cleared to sell shares six months after the deal closes.
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