Donald Trump enjoys using Twitter. He stated in 2017 that he would not have been elected president without it.
“Twitter is a wonderful thing for me, because I get the word out… I might not be here talking to you right now as president if I didn’t have an honest way of getting the word out,” he said.
You’d think that after Twitter’s new owner, Elon Musk, lifted Mr Trump’s permanent suspension, he’d jump at the chance to return. But he has yet to accept that offer.
Only Donald Trump knows the definitive answer to that question. But we do know that he stands to lose a lot of money by tweeting.
“The simplest explanation is the most likely – it’s about money,” says Josh Tucker, professor of politics at New York University (NYU).
After being banned from Twitter, Donald Trump launched Truth Social, a social media platform that looks eerily similar to Twitter.
To comprehend Donald Trump’s financial predicament, one must first comprehend the intricate nature of Truth Social’s business structure.
Last year, Trump Media & Technology Group (TMTG), the private company that owns Truth Social, announced its intention to merge with Digital World Acquisition Corp, a shell company that trades on the stock exchange.
DWAC is a Special Purpose Acquisition Company (SPAC) (Spac).
Spacs are being marketed as a way to expedite the often lengthy process of taking a private company public. In layman’s terms, it means combining a company that isn’t publicly traded with one that is.
TMTG and DWAC have agreed to merge, but the transaction has not yet been completed. But that hasn’t stopped investors from pouring money into DWAC, all of whom are betting the deal will go through. The shell company is currently worth more than $800 million (£665 million).
Given that DWAC would only be acquiring about a quarter of TMTG, Mr Trump’s newly merged company would be worth at least $3-4 billion, according to Michael Ohlrogge, a Spacs expert.
“He would own the vast majority. He would own probably 70 or 80% of it.”
If everything goes as planned, this will be one of Donald Trump’s most successful business ventures.
The key to maintaining the former president’s stock value, however, is to ensure that he remains exclusively on Truth Social.
Donald Trump announced his intention to run for President of the United States in the 2024 election at his Mar-a-Lago estate in Palm Beach, Florida on November 15, 2022.
Without Donald Trump, it’s difficult to see what Truth Social has going for it. He founded the social media company. Why should his fans use the platform if he’s posting elsewhere?
Truth Social is already having difficulty attracting users. According to Similar Web, the platform will have eight million site visits in September 2022, down from 11.5 million in July. That is insignificant for a social media company.
According to similar Web estimates, Twitter had nine billion site visits in September.
If Donald Trump stops posting or moves his posting elsewhere, the share price of DWAC could plummet, wiping out hundreds of millions of dollars.
Donald Trump’s exclusivity with Truth Social was so important to the proposed merger with DWAC that a legal provision was included in the agreement.
It states that “President Trump is generally obligated to make any social media post on Truth Social and may not make the same post on another social media site for 6 hours.”
It means that not only could Donald Trump lose a lot of money by spooking investors on Twitter, but he could also be sued.
“It’s hard to say for sure who would win, but it wouldn’t be a completely crazy suit to try to bring,” says Ohlrogge.
This puts Donald Trump in a difficult position. He may want to return to Twitter. However, he is financially and legally compelled not to.
However, there are other factors at work that could lead to him tweeting again.
Trump supporters outside the Mar-a-Lago Club, where he announced his third presidential bid.
For starters, DWAC’s stock price has been behaving strangely recently.
People have been purchasing DWA shares as a way of investing in the former president himself, rather than simply as a place where they can de facto invest in Truth Social.
“It’s a meme stock,” says Michael Klausner, Professor of Law at Stanford University. Meme stocks are companies that have lots of small investors who are online or social media followers, who can drive the share price up and down.
Many of those who have invested in DWAC, according to Klausner, are Trump supporters.
“They think that Trump’s name attached to something is going to be valuable,” he says.
It means that DWAC’s share price rises when Donald Trump’s fortunes improve and falls when they deteriorate.
On Monday, November 7, it soared following reports that he planned to run for president in 2024. However, when he finally confirmed the news nine days later in a speech that was criticized as “low energy,” the stock price fell.
According to the theory, while DWAC is merging with Truth Social, what it is really doing is allowing Donald Trump to float himself – his personal brand – on the stock exchange.
If that’s the case, it wouldn’t matter if Trump stopped using Truth Social, because the social media company is merely a proxy for Trump himself.
According to NYU’s Josh Tucker, the situation raises interesting moral questions.
“I have never personally heard of something like this before – that there is a large amount of money tracking what seems to be the political fortunes of a politician.”
He warns that a politician may then make decisions based on their financial interests rather than their political ambitions.
“If you’re a Republican, you might want your Republican nominee to use the media to the best of their ability,” he says.
(Adapted from BBC.com)
Categories: Economy & Finance, Geopolitics, Strategy, Sustainability, Uncategorized
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