Investors are optimistic that criminal charges against Donald Trump will help the former president, as they believe this will increase his wealth. The stock price of a Trump-affiliated special purpose acquisition company rose by about 10% between the close of trading on Thursday and the open on Friday.
The former president’s Trump Media and Technology Group is merging with a SPAC called Digital World Acquisition Corp., which owns a Twitter clone called Truth Social. Although Trump’s company is privately held, investors can acquire a stake in the combined company by purchasing shares of the SPAC, which will be listed on public exchanges.
Potential backers of Trump’s Truth Social account may be gambling that the public’s interest in him will increase in light of the criminal charges he faces. Adding, “THIS IS AN ATTACK ON OUR COUNTRY THE LIKES OF WHICH HAS NEVER BEEN SEEN BEFORE,” he tweeted Thursday night, “These Thugs and Radical Left Monsters have just +3.4% INDICATED the 45th President of the United States of America.”
In theory, this could draw viewers, which could increase Trump’s ad revenue and benefit his company. Investors’ expectations may not be met, according to preliminary data. On Friday morning, Trump’s Truth Social account reported 5.05 million followers, a slight increase from the 5.04 million listed the previous Tuesday.
Trump Stands to Own 73.3 Million Shares
The former president is the only person with a vested interest in this matter. According to SEC filings, Trump stands to own 73.3 million shares of the combined company. Shares were trading at $13.06 on Thursday evening, indicating that investors estimated Trump’s stake to be worth approximately $957 million. The market put Trump’s stake at about $1.057 billion as of Friday morning when shares were trading at $14.42.
If the buzz keeps up, Trump may reap even more rewards. If the combined company’s stock price stays above $15 for an extended period, Trump and the other shareholders of his company will receive bonus shares. That’s an extra $192 million in Trump’s pocket if each of those 12.8 million shares is worth $15.
However, Trump would need a lot of things to fall into place before he could access all of that money. The likelihood of a merger between Digital World and the Trump Media and Technology Group is low. Trading activity and communications between the SPAC and Trump’s business are among the topics being investigated by the Securities and Exchange Commission, the Department of Justice, and the Financial Industry Regulatory Authority. Digital World has already pushed back the date of its planned merger three times as the authorities do their work. Two weeks ago, it also replaced its CEO.
It is possible for the company’s stock price to drop even if the merger is completed. From a high of $175, shares of Digital World have dropped to their current price of $14.42. When previous news events occurred, like when Trump hinted at a 2024 presidential run, share prices briefly increased before falling again.
The possibility that Trump will be found guilty must also be taken into account. How exactly that might affect his connection to the social media industry is still up in the air. In the event of a “material disruptive event,” which was defined in the merger agreement between Digital World and the Trump Media and Technology Group as either Trump announcing another political campaign or Trump’s personal conviction for a felony, the agreement stipulated that the former president’s ownership and role in the venture would be structured to maintain continuity.
The first is complete. This second one just might work now.