By Stan Choe, AP Business Writer
NEW YORK (AP) — The Wall Street debut of Donald Trump’s Truth Social network could give him stock worth billions of dollars on paper. But the former president probably will not be able to cash it out right away, unless some things change.
The longer-term outlook for the business is highly questionable. Trump’s company has said it expects to continue losing money for a while, and at least one expert says it’s likely worth far less than the stock market suggests.
Trump’s pending return to Wall Street comes down to a vote scheduled for Friday by shareholders of a company named Digital World Acquisition Corp., which at the moment is essentially just a pile of cash. The corporation hopes to merge with Trump Media & Technology Group, the company behind Truth Social that goes by TMTG. If the shareholders approve the deal, TMTG could soon see its stock trading on the Nasdaq in Digital World’s place.
Here’s a look at the proposal and Trump’s role in it.
WHAT HAPPENS FRIDAY?
Shareholders of Digital World are scheduled to vote on whether to approve a merger with TMTG, where Trump is the chairman. Digital World is what’s called a special purpose acquisition company, or SPAC, or “blank-check company.”
SPACs raise cash and then hunt for companies to merge with. Such deals give the target companies a potentially quicker and easier way to get their stocks onto the New York Stock Exchange or Nasdaq. The arrangement lets them avoid some of the paperwork associated with traditional initial public offerings of stock, or IPOs.
For investors, SPACs offer a way to get into hyped, potentially faster-growing companies such as TMTG, the DraftKings betting service or SoFi banking.
DO SHAREHOLDERS EVER SAY NO?
It happens, but only rarely. This vote looks likely to pass given how high Digital World’s stock has jumped on excitement about Trump. It was trading Thursday above $40 per share. It’s already up roughly 140% so far…
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