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Donald Trump’s Potential $3 Billion Windfall with Truth Social IPO Amid Legal Turmoil

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Donald Trump's Potential $3 Billion Windfall with Truth Social IPO Amid Legal Turmoil

(CTN News) – Former President Donald Trump will soon receive billions of dollars—but that might not be enough to address his legal problems.

As Trump Media and Technology Group, the company behind Truth Social, goes public, he’ll make over $3 billion.

Trump Media is combining with an existing shell company called Digital World Acquisition Corp. It allows the company to bypass all the hoops of an IPO.

On Friday, Digital World shareholders approved the merger with Donald Trump Media.

Donald Trump Media’s listing process has been a bit convoluted, like the former president’s business and political career, marked by investigations and lawsuits.

Here’s how Trump stands to make billions.

All eyes are on the Digital World shareholders

Digital World shareholders should have a simple vote.

If the shell company’s shareholders approve the deal when Trump Media trades under the DJT symbol, short for Donald J. Trump, it could happen as early as next week.

Digital World hasn’t been able to get enough shareholders to show up in previous key votes, so there’s no guarantee they’ll get enough on Friday.

Digital World has also been scrutinized by the Securities and Exchange Commission and sued by key shareholders.

Donald Trump stands to earn billions.

Donald Trump could get a big windfall if Digital World shareholders approve the deal.

Trump would own over 50% of the newly merged company at current market valuations.

Truth Social had over $3 million in revenue in the first nine months of last year and nearly $50 million in losses. Those valuations are far from Trump Media’s actual value.

However, much of the value comes from the hundreds of thousands of Trump supporters who bought into Digital World in anticipation of the merger.

Hence, it’s called a “meme stock,” meaning shares are driven by the whims of individual investors rather than by fundamentals.

AMC and Gamestop, which have experienced spectacular rallies during the pandemic, are great examples of this in the stock market.

Jay Ritter, Cordell professor of finance at the University of Florida, says the digital world isn’t much different from those two crazes.

“It’s more of a meme stock where the price is disconnected from the fundamentals,” he says.

Professional investors like Matthew Tuttle, CEO of Tuttle Capital Management, are also looking for deals.

Even though I don’t understand it fundamentally, I’m going to trade it because it’s going to move,” Tuttle says. “It’s going to have a rabid following, and it’s going to be a fun stock.”

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But Donald Trump might not be able to sell his shares soon

Donald Trump is in desperate need of cash right now.

To settle a civil fraud case, Trump needs to post a bond of over $400 million, but he can’t find a company to do it.

Trump Media’s stake in the former president isn’t expected to be worth much anytime soon.

Trump Media shares will be locked up for six months under the current agreement, meaning he can’t sell them.

It’s possible he could work out a deal to sell some or all of his holdings earlier, though a big sale at once could send Trump Media shares plummeting.

He could also try to find someone to loan him the money using his Trump Media shares.

Donald Trump Media shares would trade above what analysts think they’re worth, making it difficult for a lender to lend him money.

Tuttle points out that this is former President Trump.

Tuttle says, “Whenever Donald Trump’s involved in something, you’ve got to assume the unexpected.”

Arsi Mughal is a staff writer at CTN News, delivering insightful and engaging content on a wide range of topics. With a knack for clear and concise writing, he crafts articles that resonate with readers. Arsi's pieces are well-researched, informative, and presented in a straightforward manner, making complex subjects accessible to a broad audience. His writing style strikes the perfect balance between professionalism and casual approachability, ensuring an enjoyable reading experience.

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