Donald Trump's New Wealth: The Implications Of The DWAC And TMTG Merger

Author Dalboyy 13 Nov 2024

Earlier this morning, the majority of shareholders of the publicly-traded Digital World Acquisitions voted YES to approve a merger with Trump Media & Technology Group, the owner of Truth Social. With the approval, Donald Trump is now 1 and 3 when it comes to winning the popular vote. More importantly, he now officially owns 79 million shares in a soon-to-be public social media company that will trade under the ticker symbol "DJT." As I type this article, Trump's 79 million shares are worth $3.24 billion based on DWAC's current price per share.

But here’s the extremely urgent question: Will this gusher of paper wealth help Donald Trump pay the $464 civil judgment he owes to the New York State Attorney General by Monday? Will this windfall help stave off the NY AG's planned seizure of two crown jewels from Trump's property portfolio?

Understanding the Merger Dynamics

Let’s start with some basics. After getting banned by Twitter in January 2021, Donald Trump launched his own Twitter-like social network called Truth Social under a parent organization called Trump Media & Technology Group (TMTG). In October 2021, TMTG announced its intention to go public by merging with an already-public holding company called Digital World Acquisitions Corp (DWAC).

DWAC is known as a "special purpose acquisition company," or SPAC. To put it simply, a SPAC company goes public without any assets or businesses. People buy the stock based on the company's plans to eventually merge with some private company. If the SPAC doesn't find a target by a certain deadline, it returns the money raised to shareholders. From pretty much day one, DWAC planned to merge with TMTG, a plan that has been in the works for 2.5 years. DWAC has approved at least two deadline changes to reach the vote that just happened this morning.

Today, shareholders in DWAC were asked whether or not they wanted to merge with TMTG. Unsurprisingly, they voted YES, as DWAC's entire purpose has been to merge with TMTG. With this approval, TMTG will become a public company without the costs associated with conducting its own IPO process. This merger will officially take place next week, and the new entity will operate under the ticker symbol "DJT."

The Financial Shift: A $3.239 Billion Windfall

With the shareholder approval, Donald Trump now owns just under 79 million shares of the combined entity, representing roughly 58% of the total company. This makes sense since DWAC previously owned no assets or businesses. The only meaningful asset the new company will have is Truth Social, which, according to its latest SEC filings, lost $26 million in the third quarter of 2023, with only $1.1 million in total revenue.

As I type this article, DWAC's price per share is $41. This means Donald Trump's 79 million shares are worth approximately $3.239 billion. Prior to the vote, our estimate for Trump's net worth was $2.3 billion. We have now raised our estimate to $5.5 billion. However, this good news comes with significant challenges for the former President.

The $464 Million Judgment and Its Implications

After losing a civil fraud case brought by the New York State Attorney General last month, Donald Trump was ordered to pay a $454 million fine. With interest, the judgment has grown to $464 million. According to the terms of the proposed SPAC merger, insiders like Trump are locked up for six months. This means that Donald cannot sell any of his shares until late September. Additionally, he is not allowed to use these shares as collateral for a loan.

If Trump could somehow leverage his newfound $3 billion windfall, it would be incredibly helpful. Unfortunately, he has not been able to secure a private lender willing to provide cash by using his real estate assets as collateral.

On the plus side, the rules restricting insiders from selling or lending shares could potentially be lifted by the DWAC/TMTG board of directors, which Trump controls. If he could find someone willing to put up $464 million on his behalf in exchange for holding onto $500-600 million worth of his locked-up shares, that would be an ideal solution. However, this comes with risks for the lender, as the stock value might drop significantly before the lock-up expires.

The Risk of Asset Seizure

If Donald fails to come up with $464 million in cash by Monday, the New York Attorney General has already filed pre-judgments in Westchester County, New York. What’s at stake in Westchester? Two of the crown jewels in Trump's portfolio:

Seven Springs Estate: A 200-acre private estate dating back to the 1900s. Trump has owned this property since 1995, when he purchased it for $7.5 million. The current appraised value is likely between $50 million and $100 million. The value of Seven Springs played a central role in Trump’s fraud conviction.
Trump National Golf Club Westchester: A 180-acre, 18-hole golf course featuring a 75,000-square-foot clubhouse.

As tensions rise, the outcome of these financial decisions will have significant implications for Trump's future. The merger offers potential financial relief, but the looming judgment and asset seizure create an uncertain landscape ahead.

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