The recent merger between Digital World Acquisition Corp. and Trump Media has left shareholders feeling uncertain. The share price of DWAC took a nosedive, dropping nearly 14% after shareholder approval of the merger. This sharp decrease in value has raised concerns about the future profitability of Trump Media and the impact it will have on investors.
Trump Media & Technology Group, the company being merged with DWAC, has reported significant losses. With nearly $50 million in losses over the first three financial quarters of 2023 and minimal revenue of less than $3.5 million during that time, there are doubts about the company’s ability to generate substantial income. This, combined with the legal challenges facing Donald Trump, raises questions about the overall financial health of the newly merged entity.
Legal Troubles and Financial Constraints
Donald Trump’s legal woes pose a significant threat to Trump Media’s success. With civil legal judgments exceeding half a billion dollars and mounting legal bills from ongoing cases and criminal prosecutions, Trump’s financial resources are stretched thin. His inability to secure an appeal bond for a $454 million fraud judgment has further complicated matters, leaving him with limited options to cover his legal costs.
Restrictions on Share Sales
Under the terms of the merger, Trump is prohibited from selling his shares in Trump Media for six months. However, there is speculation that the new board of directors, including his son Donald Trump Jr. and other close allies, may vote to lift this restriction to enable Trump to liquidate his shares sooner. This could have a detrimental effect on the share price of Trump Media, leading to a potential sell-off by other shareholders and further devaluation of the company.
The ticker symbol DJT, which will be used for Trump Media when it begins trading on the NASDAQ stock market, has a dark history. Previously used for Trump Hotels & Casino Resorts, the company faced financial difficulties and ultimately filed for bankruptcy protection in 2004. The parallels between the two ventures raise concerns about the long-term viability of Trump Media and its potential for success in the market.
Overall, the future of Trump Media remains uncertain as shareholders grapple with the recent share price decline and the looming financial and legal challenges facing the company. The impact of these factors on the profitability and viability of Trump Media is yet to be seen, but investors are rightfully cautious about the company’s prospects in the face of these obstacles.
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