donald trump is one of the world’s most famous businessmen, but his companies have generally been privately owned. Investors now have the opportunity to join the former president of the United States through the Digital World Acquisition (DWAC). stocks plunged on news tesla (tsla) chief executive elon musk accepted an offer to buy twitter (twtr), but rebounded after deal was put in place in doubt.
the special purpose acquisition company (spac) is being used as a vehicle to take over the trump media & technology group public. when the merger is complete, it will likely trade on the nasdaq with the ticker “tmtg”. The anticipated time frame for completion of the merger has not been publicly disclosed, but the Digital World acquisition is seeking a one-year extension to complete the deal.
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trump has boasted that he will offer a “big top” platform as he attempts to take on tech giants like the metaplatforms (meta)parents of twitter and facebook. but he has some regulatory hurdles to clear and has just requested a delay in the merger
so donald trump’s best stock is a buy now?
donald trump in dwac
the acquisition of the digital world is to serve as a vehicle to bring trump media & public technology group through a merger.
trump, who has had trouble reaching his audience through social media since January 1. 6 capitol riot, unveiled his vision for the company last October.
“Unlike big tech platforms, there will be no hidden banning, throttling, demonetization, or manipulation of algorithms for political manipulation,” Trump said in a statement. “We will not treat users like lab rats for social experiments, nor will we label alternative viewpoints as ‘disinformation’.”
dwac asks to delay the merge
dwac shares took a hit after it emerged the company is asking shareholders to approve a one-year extension for it to finalize its business merger with trump’s media and technology group.
initially announced an extension vote for September. 6, warning investors that if the postponement to September 2023 is not granted, the company will cease operations and liquidate the shares.
but on a sept. dwac’s presentation on 7 said that the special meeting of shareholders will be adjourned until noon on 1 september. 8. It comes after CEO Patrick Orlando said it has been a challenge getting the individual investors who make up the majority of the shareholder to vote. the company also added a third phone line to facilitate the voting process.
The digital world ended up pushing the vote even further, until October 1st. 10, and could still extend the date even further. dwac has $293 million in trust to pay for a campaign to reach shareholders.
In a federal filing, dwac said that if shareholders don’t approve the extension, its backer, arc global investments, would contribute about $2.9 million to extend the deadline to December 1. 8, 2022.
y dwac has also said that if shareholders do not approve the extension, its sponsor arc global investments would contribute about $2.9 million to extend the deadline to December 1. 8, 2022.
truth social launches
truth social, a platform touted as an alternative to twitter, was scheduled to launch on Presidents’ Day, which falls on February 1. 21.
While it took trump a while to fully engage with the platform, he now seems to be posting every day.
The service also took a step forward with the launch of its web version at the end of May. users can now log in and use the service by using their iphone.
dwac shares were written off on apr. 4 on reports that chief technology officer Josh Adams and chief product development officer Billy Boozer have resigned.
The social truth app, which courts conservatives, allows users to follow others and current affairs. instead of a tweet, users share a “truth”.
is the first board in a three-stage launch of trump media products. will continue with the launch of the tmtg+ video-on-demand subscription service. finally, the firm aims to launch its own network of podcasts.
In an investor presentation, the company estimated that it will have 16 million users and 800,000 monetizable users on truth social by 2022.
The company expects the average revenue per user from social networks to grow to $13.50 by 2026. It also expects to have 81 million users by then. This compares to Twitter’s current average revenue per user of $23.76.
targets 40 million tmtg+ subscribers by 2026. average monthly fee per user will hit $9 that year.
elon musk twitter raises dwac stock uncertainly
Truth Social’s biggest competitor is Twitter, with the latter company getting a big boost after Tesla CEO Elon Musk took a large chunk of the company. instead, dwac was hit.
In April, the tech billionaire struck a deal to acquire the company for 54.20 a share. but is now trying to back out of the $44 billion deal.
The eccentric executive is not happy with the number of spam accounts on the platform. the musk camp has concluded that twitter’s figures on spam accounts are unverifiable.
twitter won a legal victory in early July after a delaware court ruled in favor of a five-day expedited trial. Twitter’s lawsuit is now expected to go to trial in October.
It remains to be seen whether elon musk will be forced to go ahead with the original deal, negotiate a reduced purchase price, or be able to walk away from the deal altogether.
However, trump committed to his own site even though musk said he would allow him to start using twitter once again if he buys it. this is important as it is a mass appeal on social media.
“I’m not going to go on twitter, I’m going to stay with the truth,” he told fox news. “I hope elon buys twitter because he’ll make it better and he’s a good man, but I’ll stick to the truth.”
trump media make moves
trump media & the tech group made a number of announcements as it geared up for its big launch.
December 1-January 4 announced $1 billion in investments from institutional investors. the capital will be received upon completion of the merger.
Trump said this “sends an important message to Big Tech that censorship and political discrimination must end.”
“America is ready for social truth, a platform that will not discriminate based on political ideology,” he added.
on december 1 the 6th, he said congressman devin nunes would join the firm as its chief executive officer. The firm also announced in December that it has entered into a partnership with video streaming firm rumble.
trump media said it had a “wide-ranging technology and cloud services agreement” with rumble. will operate part of the social network of truth, as well as its video-on-demand service, tmtg+.
dwac actions have to overcome this hurdle
The company also disclosed in a December filing that it was requested by the Securities and Exchange Commission and the Financial Industry Regulatory Authority for information on stock trading and communications before the merger was announced.
The revelation came after Sen. elizabeth warren, d-mass., asked the clerk to conduct an investigation.
In a letter, he questioned whether the company and trump “may have committed securities violations by having private, undisclosed talks about the merger as early as May 2021, while omitting this information in the filing and presentation of US Securities and Exchange Commission (SEC).” other public statements.”
but according to dwac files, the investigations were initiated by the sec and finra before warren submitted his request.
The company has said in prospectuses that it had “no material discussions, directly or indirectly, for any purpose of business combination.”
new legal problems for the actions of donald trump
dwac took another beating with the news that several board members had been subpoenaed.
a federal grand jury in the southern district of new york is seeking more details about its merger agreement with trump media & technology group.
In a June 27 filing, dwac said the subpoenas, as well as investigations by the justice department and the sec, risk delaying or squashing the merger deal entirely.
according to dwac, he found out about the grand jury subpoenas on June 16. the grand jury is requesting details similar to those previously requested by the sec.
dwac stock analysis
ibd stock analysis shows problems inherent in stocks.
has seen its relative strength index drop to 22 out of 99, putting it in the bottom 22% of stocks in terms of market performance over the past 12 months.
It is now almost well below its all-time high of 175, which it reached on October 1st. 22. dwac shares finally had a good month in July, gaining 25%, but then fell 19.2% in August. it has continued to fall in September, falling nearly 24% so far.
This comes after it fell almost 45% in June. dwac also fell sharply in May, falling 16.6%, plummeting 30% in March and falling 18.8% in April.
remains anchored below its 50-day moving average. previously triggered a sell signal by falling below this key benchmark.
The hype around trump sent stocks soaring to dizzying heights before they plummeted back to earth.
donald trump’s actions miss this key ingredient
but connoisseurs can look for stocks showing consistent earnings growth. this is where dwac stock falls short. its lack of income has earned it an eps rating of 4 out of 99.
Also, there are no analyst earnings estimates for Donald Trump’s definitive stock.
Since the company hasn’t fully launched a product yet, this is an entirely speculative move. it’s a bet that the company will be able to turn its hype into profit results.
While this is certainly possible, there are many obstacles in the way. not least the fact that trump is entering an arena dominated by giants like facebook, twitter, tiktok and snap (snap).
On the positive side, institutional sentiment is solid. It has an accumulation/distribution rating of b-, reflecting purchases in recent weeks. however, overall fund ownership remains low.
dwac stock without ordinary space
Companies that went public through mergers with special purpose acquisition companies have struggled so far in 2022.
Speculative stocks in general have been punished as the Fed eases its dovish policies.
but dwac has been outperforming other spaces by a wide margin. in fact, it’s the best performing spac stock of all time, according to spac research.
It’s worth keeping in mind that spacs have underperformed the broader market by 25% over the last decade, according to University of Florida IPO expert professor Jay Ritter.
according to msci, spacs can go public faster and cheaper, and with “much less investor or regulatory scrutiny”. they are also more likely to be managed by a majority shareholder than conventional IPOs.
“However, in most other respects, investors in these space-combining companies faced essentially the same corporate governance risks as investors in any other recent initial public offering,” analyst Nilufar Kuchimova said in a statement. research note.
is donald trump’s best stock a buy now?
At the moment, buying dwac shares is more like gambling than investing. the firm has no earnings history worth mentioning and continues to slide after a strong July. The fact that Elon Musk, one of the world’s most acclaimed entrepreneurs, can still buy Twitter makes the road ahead even more challenging. even if that deal fails, truth social is by no means a sure thing.
Furthermore, the request for a one-year extension to complete the merger raises more questions. with an ongoing security investigation into the deal, there is still a risk it will be stopped in its tracks. a new federal grand jury investigation further complicates matters. dwac stock is not a buy at this time.
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