Trump’s Expected Increase in Net Worth as Truth Social Prepares for Initial Public Offering

Trump’s Expected Increase in Net Worth as Truth Social Prepares for Initial Public Offering

Former President Donald Trump is set to potentially earn billions of dollars as shareholders vote to take his Truth Social platform public. This move comes at a time when Trump is facing numerous legal challenges that have resulted in significant financial judgments against him. While the initial public offering (IPO) of Truth Social could provide Trump with a windfall, there are several factors that could impact his ability to cash out.

The journey to make Truth Social public has not been without its obstacles. The blank-check company that sought to purchase Trump Media & Technology Group (TMTG) faced legal hurdles from the Department of Justice and the Securities and Exchange Commission (SEC). However, a recent ruling by a Delaware court has allowed the merger to move forward.

If Truth Social goes public, Trump could see his net worth increase by over $3 billion on paper. As the majority shareholder, owning nearly 60 percent of the combined company, this IPO could offer Trump a significant financial opportunity. However, there are limitations that may hinder his ability to immediately benefit from this windfall.

Shareholders of Trump Media & Technology Group will be subject to a lockup provision for six months after the deal’s close. This provision prevents early investors from quickly selling their shares once the company goes public. Therefore, Trump may not be able to use the stock as collateral until later this year. Nevertheless, there are potential alternatives, such as waiving the lock-up provision or adjusting it once the deal is finalized.

The board of directors for the new entity could include prominent figures like Donald Trump Jr., former Rep. Devin Nunes, and previous administration officials such as U.S. Trade Representative Robert Lighthizer and Small Business Administration chief Linda McMahon. Their involvement in the company’s decision-making process could influence Trump’s ability to cash out early.

While the potential financial gains from Truth Social’s IPO are substantial, there are concerns about the company’s financial stability. Truth Social has yet to turn a profit and reported a net loss of $49 million in the first nine months of 2023. Revenues have been modest, with just $3.38 million in total and $1.07 million in the third quarter. Additionally, the company faces significant interest expenses and has limited cash on hand.

Furthermore, Truth Social’s attempt to differentiate itself from other platforms by standing up to Big Tech’s censorship efforts may be undermined by recent developments. With Elon Musk’s acquisition of X (formerly Twitter), one of the largest social media outlets, the sector’s speech-censoring endeavors have largely been abandoned. This could impact Truth Social’s appeal to users and potentially diminish its value in the long term.

Securities and Exchange Commission (SEC) filings reveal that the company has warned about Trump potentially voting in his own interests rather than what is best for the company. This raises questions about the stock’s fundamentals and whether investors are primarily betting on Trump’s name rather than the company’s potential.

Despite these concerns, the anticipation surrounding Truth Social’s IPO has led to a positive market response. DWAC shares rallied about 2 percent before the opening bell, indicating investor interest in the company. However, it remains to be seen how Trump’s financial challenges and the company’s performance will ultimately impact his net worth.

In conclusion, the upcoming IPO of Truth Social presents a significant opportunity for Donald Trump to increase his net worth. However, there are obstacles that may prevent him from immediately benefiting from this windfall, such as a lockup provision and financial challenges faced by the company. The success of Truth Social will depend on its ability to differentiate itself in a crowded market and navigate potential conflicts of interest involving its prominent board members. Only time will tell if this IPO will live up to its potential or face long-term challenges.