By Brian Cheung—
NBC News
Donald Trump's social network is ready to debut this Tuesday on the stock market, which could produce a financial gain for the former president just when he faces liquidity problems.
His stake in the company—Trump Media and Technology Group, parent of Truth Social—is worth billions of dollars.
However, that's wealth on paper, and several things would have to happen for him to be able to cash in on that stake and deal with some of his financial problems, including mounting legal bills in his criminal cases and a hefty appeals bond that came with it. of a civil fraud case in New York.
On Monday, an appeals court reduced the bail to $175 million, much lower than the original $464 million.
In this photo illustration, the Truth Social logo is seen on a smartphone screen in Chania, Greece, on August 27, 2023. Nikolas Kokovlis / NurPhoto via AP Image
These are some of the big questions surrounding Trump Media's stock market debut:
How will Trump's company go public?
Shareholders of holding company Digital World Acquisition Corp. (DWAC) agreed on Friday to merge with Trump Media.
The new company will be listed on the Nasdaq under the symbol DJT.
When was the last time a Trump company went public?
Trump's hotel and casino company, focused on his Atlantic City gaming and entertainment venues, went public in 1995, also under the symbol DJT.
The company ended up declaring bankruptcy in 2004.
Is Trump Media having an initial public offering (IPO)?
No.
DWAC was founded in 2021 as a special purpose acquisition company, or SPAC.
This type of company raises money before deciding on a company to acquire, which is why they are also commonly known as a “blank check company.”
DWAC hit the public markets, raised a ton of money, and then announced plans to acquire (or merge with) Trump Media and Technology Group, the formerly private firm that owns its social media platform, Truth Social.
[A court eases the $454 million bail against Trump for tax fraud: reduces it to $175 million and gives more time to pay it]
That announcement came in 2021, but was delayed by legal holds and investigations, including allegations of fraud and insider trading by the Securities and Exchange Commission (SEC).
In the case of the SEC, an agreement was reached last year in which the company was fined $18 million, but which paved the way for the merger.
How much can Trump earn?
It's hard to know.
Trump would own nearly 80 million shares in Trump Media, or about 58% of the company.
At DWAC's opening share price on Friday, that could value its stake at more than $3 billion.
DWAC stock, which fell on Friday but rose again on Monday, has more than doubled this year but is still far from its 2022 highs. Its volatility sparked criticism that it is a “meme stock” driven by a following. of fans, rather than business or market fundamentals.
Trump Media has lost millions while posting less than $3.5 million
in revenue through the first nine months of 2023, according to the most recent data available.
Can Trump sell his shares instantly?
No.
Under the merger agreement, he cannot sell his shares for six months, part of a standard “lock-up” procedure in many merger agreements.
But there is a great variation.
The new board of directors of the merged company
could authorize Trump to sell his shares before that deadline.
And the council will include his son Donald Trump Jr, as well as Linda McMahon and Robert Lighthizer, who were members of his Administration.
If Trump obtains permission and, in turn, sells shares, the company – and himself – could be exposed to legal challenges from shareholders who are left empty-handed in the event of a sale.
Although most shareholders are likely to be Trump supporters, it would be enough for a few disgruntled shareholders to file a lawsuit and claim that Trump did not act in the shareholders' interest by selling his stake.
Can Trump put his shares as collateral for a loan?
There could be some financiers willing to take Trump's shares as collateral for a massive loan that he could use to later cover the money he needs to deposit to appeal the decision in his civil fraud case in New York.
On Monday, a New York appeals court reduced the bail amount and said the former president has 10 days to surrender it.
However, there can also be legal problems in obtaining a massive loan by leaving any DJT stock as collateral.