Trump’s Truth Social SPAC Gets a Boost After DeSantis Drops Out

Shares of Digital World Acquisition Corp (DWAC), the special purpose acquisition company (SPAC) merging with former President Donald Trump’s Truth Social, surged by over 88 percent on Monday. It comes after Florida Governor Ron DeSantis’s unexpected exit from the 2024 presidential race and subsequent endorsement of Trump.

The endorsement by DeSantis, who announced his withdrawal in a decisive statement bashing GOP rival Nikki Haley and pledging his support to Trump on Sunday, has been interpreted by the market as a unification of the Republican base behind the former President. That development has arguably provided a boost to investor confidence in Trump-affiliated ventures.

The rally in DWAC’s stock, crucial for the financial health of the Trump Media & Technology Group (TMTG), parent of the social media platform Truth Social, reflects a growing investor sentiment tied to Trump’s strengthened position in the Republican presidential race. With the merger between Digital World and Trump Media still pending, the stock’s rise, reaching its highest level since May of 2022, marks a turn in the fortunes of a venture that has been fraught with regulatory challenges and financial losses.

Truth Social, with a user base of around seven million, has struggled financially, incurring losses while generating limited revenue, primarily from advertising, according to its regulatory filings. It generated roughly $3.3 million in revenue in the first nine months of 2022 but reported about $49 million in losses over the same period.

However, while the company is still dealing with regulatory hurdles, DWAC on Monday made a step toward finalizing its merger with TMTG by filing a Form S-4 with the Securities and Exchange Commission (SEC).

The filing is a key indicator that the company is advancing toward the merger. The Form S-4 suggests that the merger with DWAC could provide the much-needed financial support to mitigate losses and sustain the platform’s operations.

The company said in the filing that it intends to issue up to 135,781,734 shares of common stock at the initial public offering (IPO), with the prospectus revealing a proposed merger consideration of $875 million to be distributed among TMTG securityholders.

Notably, according to the filing, Trump is set to receive shares of a new class of common stock, distinct from other securityholders.

Newsweek has reached out to both DWAC and the Trump campaign for comment via email.

With the merger’s conclusion, DWAC is expected to undergo a name change, signaling a new phase for the company as it seeks to leverage its association with Trump and his growing political momentum.

While the merger is still subject to final approval by both companies’ stockholders and regulatory clearance, the SEC filing is a forward step in what has been a prolonged process, marked by a meticulous review to ensure compliance with all necessary legal and financial regulations. The completion of the merger could signal a new chapter for Truth Social, providing it with the financial stability required to compete in the social media landscape.

With the political climate heating up as the U.S. presidential election draws nearer, the platform’s association with Trump could prove to be either a strong asset or a liability, depending on political developments and public sentiment at the IPO.

The markets’ response to DeSantis’s exit and the subsequent rally in DWAC’s shares could be a prelude to a more integrated relationship of politics and economics as the presidential election approaches. The former president’s campaign, now buoyed by endorsements and a clear path to the Republican nomination, may continue to see such political victories mirrored in the financial performance of associated enterprises.