Former President Donald Trump’s Truth Social is going public on Tuesday after investors approved the merger.
The timing seems favorable for Trump, who needs to post $175 million to New York, reduced from $454 million. Typically, deals such as this do not allow for majority shareholders to sell their shares so early, barring them from doing so for six months.
However, Trump could be granted a waiver to bypass this rule from the seven-member board. Boards typically wait a month before granting waivers in order to prevent other shareholders from selling that could result in losses for independent investors.
“Nobody really knows how it’s going to go, but it will definitely be fascinating to watch,” Kristi Marvin, founder of SPACInsider, a data and research provider, told the Wall Street Journal.
He would still be limited to how much stock he could sell. Over a three-month period, Trump would be allowed to sell at least “several hundred million dollars’” worth of his share. He could use this money to pay off his bond in New York, which his lawyers previously said he could not obtain.
Trump Media and Technology Group will begin public trading under the ticker DJT at the opening bell on Tuesday, debuting with a stock price of $50 per share. Trump owns 60% of the company, roughly 78 million shares. Monday’s trading frenzy made Truth Social one of the largest parts of Trump’s net worth.
Wall Street has valued Trump Media at $9 billion, which experts say is too high.
“It’s wildly overvalued. … We just haven’t seen anything by way of revenue, users on the platform, or anything else,” Julian Klymochko, who manages a SPAC-focused fund at Accelerate Financial Technologies that doesn’t include Digital World, told the Wall Street Journal. “It’s extremely difficult to judge how viable this actually is.”
Shares of Digital World Acquisition, the acquisition company set to become Trump Media, have spiked nearly 200% this year, including a 35% increase after the deal was finalized on Monday.
“The underlying business doesn’t seem to be worth much. There is no evidence this is going to become a large, highly profitable company,” Jay Ritter, a finance professor at the University of Florida who studies initial public offerings, told CNN. “I’m reasonably confident the stock price will eventually drop to $2 a share and could even go below that if the company blows through the money it got from the merger.”
Truth Social has not revealed how many users are on the site, but that is expected to change now that the company has gone public. Research suggests there are as many as 5 million users on the site.
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In comparison, Reddit, another social media website that recently went public, was valued at $9.5 billion with 73 million unique daily visitors to the site.
This is the first time in nearly 30 years that a Trump-owned company is going public. In 1995, Trump made his Trump Hotels and Casino Resorts public in a similar IPO. While the shares initially performed well, the stock fell, and nine years later, Trump Hotels and Casino Resorts filed for Chapter 11 bankruptcy.