Former President Donald Trump is on the brink of making a comeback to Wall Street after receiving approval from US regulators for a controversial merger. The merger, between Truth Social owner Trump Media & Technology Group and a blank-check company, has been given the green light by the Securities and Exchange Commission, marking a significant milestone for Trump’s financial ambitions.
If the merger is approved by shareholders, Trump Media will transition into a publicly-traded company, with Trump holding a substantial stake potentially worth billions. The blank-check firm, Digital World Acquisition Corp., revealed that the SEC’s approval of the merger proxy has led to a 15% surge in its stock price. With Trump’s political success in the Republican presidential primary driving the stock’s nearly tripled performance this year, the merger progress has sparked optimism among investors.
Finance professor Jay Ritter from the University of Florida anticipates that the merger could inject approximately $270 million in cash into Trump Media, offering a significant boost to the growth of Truth Social, the company’s digital platform. According to new SEC filings, Trump is poised to possess around 79 million shares in the combined entity, translating to a staggering $4 billion valuation based on Digital World’s current trading price of about $50.
However, Ritter points out that converting this paper wealth into actual cash may pose challenges for Trump. A lock-up period would restrict Trump and other insiders from selling their shares until six months after the merger, and the company’s performance will be closely tied to the former president, potentially complicating future share sales. Ritter also raises concerns about the lofty valuation of the media company, describing it as a ‘meme stock’ with a valuation disconnected from its fundamental value.
The approval of the merger marks a pivotal moment in Trump’s financial endeavors, signaling his potential return to the Wall Street arena and the prospect of amassing significant wealth through his stake in the newly-combined company.
