Truth Social SPAC struggles to get votes to delay merger

Donald Trump’s social media startup, Truth Social, faces a perilous future.

Driving the news: A former company executive reportedly filed a whistleblower complaint with federal securities regulators in August, and he remains unable to access hundreds of millions of dollars tied to a potential merger with an acquisition company. blank checks.

  • The company currently generates no revenue and said it only has enough cash to last until next spring.
  • Shareholders of the blank check company, Digital World Acquisition Corp., have been asked to approve a one-year extension to their merger. The initial vote has already failed and the DWAC sponsor continues to seek votes before the new November 3 deadline.
  • Truth Social has set aggressive growth targets – 56 million users by 2024 and 81 million by 2026 – which will be difficult to achieve without access to DWAC-related capital and related outside investment (called PIPE) to the potential merger.

Data: Kaggle, Trump Twitter Archive, Axios Research; Graphic: Axios Visuals

The big picture: Truth Social is facing serious financial and legal difficulties.

  • He failed to pay major suppliers and his SPAC is currently under investigation by the SEC for possibly brokering his merger deal before making it public, which is illegal if true.
  • William Wilkerson, former senior vice president of operations at Truth Social’s parent company, is cooperating with the investigation — including turning over internal business documents — according to a statement made by his attorneys to the Miami Herald.

Yes, but: The app continues to grow modestly, giving Trump a bullhorn as he remains de-platformed from most social media sites.

  • An Axios analysis of engagement with his posts on Truth Social in September 2022 compared to his posts on Twitter in September 2020 reveals that although his engagement has declined significantly, Trump still receives noticeable attention on Truth Social.
  • He had 4.17 million followers on Truth Social, as of October 11, compared to around 86 million followers he had on Twitter in September 2020.

What to watch: DWAC shares have taken a hit in light of Elon Musk’s planned purchase of Twitter. Musk said he’d like to relax content moderation rules and called Truth Social “essentially a right-wing echo chamber.”

  • “You might as well call it Trumpet,” he told the Financial Times last week.

About Ricardo Schulte

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