Truth Social Faces Battle for Its Future

The future of Donald Trump's social media network Truth Social could be decided this week as its parent company fights for a deal that would allow it to go public.

The Trump Media & Technology Group (TMTG), which owns the platform the one-time president frequently uses instead of his formerly beloved Twitter, is facing a potential make or break shareholder vote this week on whether it can merge with Digital World Acquisition Corporation (DWAC), which has raised $300 million from investors.

In October 2021, TMTG announced it would be merging with DWAC, a special-purpose acquisition company [SPAC], or "blank-check" acquisition company, in a move that would see its value on the stock market potentially hit $1.7 billion once public.

The planned merger has been frequently delayed, with the deadline for the deal to complete now set for September 8. On September 5, DWAC will hold a meeting in order to convince stockholders to grant the one-year extension to complete the deal.

If the required 65 percent approval vote threshold fails and a deadline is not extended, DWAC will be forced to liquidate and return the $300 million it raised back to the shareholders, leaving Trump's Truth Social platform with a potentially rocky future. TMTG has been contacted for comment via email.

"While we currently fall short of the necessary votes to extend the liquidation date, we urge our stakeholders to come together and support this extension," Eric Swider, CEO of DWAC, said in an August statement.

"If more of our stockholders do not promptly vote for the extension, we will be forced to liquidate on September 8, 2023.

"As our loyal stockholders know, a vote for the Extension is a vote for freedom of speech and a vote for innovation and growth," Swider added. "Every single share voting for the Extension is critical to help us progress our proposed merger with TMTG. Whether you have one share or 1,000 shares we please ask you take a few moments to vote."

Normally such deadline-extending votes are easily approved, with the deadline to close the deal between TMTG and DWAC already backed on five other occasions.

However, unlike most SPAC shares which are purchased by professional or institutional investors, shares in DWAC are mainly individual investors who bought them solely to support Trump, and may not be accustomed to voting on their shares.

Jay Ritter, a University of Florida finance professor, suggested that the individuals who purchased their DWAC shares under loyalty to the former president may not be aware of the looming liquidation deadline surrounding the merger deal.

"The deal does seem to be running out of time," Ritter told The Washington Post. "You can't just keep getting extensions forever."

As noted by Bloomberg, even if the deadline is extended, the deal could still fall through if TMTG's board decides the merger isn't in the best interest of the investors. Both TMTG and DWAC are also only committed to the deal until December 31, 2023.

The deadline for the merger was previously extended in November 2022. However, since then DWAC has been hit by a series of potential setbacks that could influence this upcoming vote.

In July, the Securities and Exchange Commission found that DWAC had misled investors and the SEC by failing to disclose that it was planning on buying TMTG before it raised its $300 million in IPO funds, and fined $18 million.

DWAC also removed its former CEO Patrick Orlando as the head of the company in March, with another former board member, Bruce Garelick, arrested in June on suspicion of insider trading.

Ritter told The Post that the merger has "been pretty much unprecedented in terms of all of the glitches."

"TMTG remains committed to the merger and is excited by the possibilities we expect it to unlock," TMTG CEO Devin Nunes said in a statement. "We look forward to getting this deal done as soon as possible, in partnership with DWAC, and moving forward to the next stage of our company's growth."