Former President Donald Trump is on the verge of a significant windfall as his social media platform, Truth Social, prepares to go public through a merger with a blank-check company. If approved by shareholders, Trump could own a dominant stake in the new public company, valued at over $3 billion at current market prices.
However, experts caution that this windfall may not alleviate Trump's financial woes. He faces a looming deadline to post a $464 million bond in a civil fraud case in New York, with potential risks of asset seizure if he fails to comply.
While the merger with Digital World Acquisition Corp. could make Trump the largest shareholder with a stake of at least 58.1%, the stock's liquidity poses challenges. The company's fundamentals, including a mere $1.1 million in revenue and a $26 million loss in the last quarter, raise concerns about the stock's overvaluation.
Despite the stock's current price of around $43, experts believe it is inflated and not reflective of the company's actual value. Trump's shares are subject to a lock-up period, preventing immediate selling or pledging, further limiting his ability to access cash.
Even if Trump were to find a buyer for his shares, restrictions in the charter and potential market reactions complicate any attempts to leverage the stock for liquidity. Banks may be hesitant to accept the stock as collateral due to uncertainties surrounding its value and potential market fluctuations.
In conclusion, while the merger could potentially provide Trump with a substantial stake in a public company, the practical challenges and legal restrictions surrounding the stock's liquidity may hinder his ability to address his financial pressures effectively.
