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Truth Social: It's Complicated

 


I don't know what is going on with the Trumpets' direct entry into the social media market, Truth Social. 

The project does seem to have done the country some good in that it gave Rep. Nunes a new hobby, probably a more harmless one than were his efforts at lawmaking. 

Other than this, it is confusing, especially since it has gotten mixed up with SPACs, a yesteryear trend not yet old enough to be a cool retro thing. 

A SPAC is a "special purpose acquisition company." It is a shell of a company, listed on a stock exchange, but with no operations other than the search for another company to buy. 

Who would want to be purchased by a SPAC? Generally, a company that wants to be on a stock exchange but does not want the operational difficulties and the costs associated with, first, applying for a listing then, if that application is granted, staging an IPO.  Getting yourself taken over by a SPAC that has already done the prep work and gotten listed evades that stuff. SPACs are also known as "blank check" company, because their investors effectively paid into a management that has no operational company to run, just the project of finding one. 

This was a hot thing in 2020. As a fad it did not survive 2021. But  there are still a few blank check companies around looking for acquisition targets, and Trump's company has made a deal with one of them. The operational company is the Trump Media & Technology Group (which owns Truth Social, just as Alphabet owns Google and Meta owns Facebook). The interested SPAC, also known as a blank check company, is called Digital World.

Yet the deal has run into some trouble. This gets confusing. I'll refer you to a story in The Wall Street Journal: SPAC Again Delays Shareholder Vote on Merger With Trump’s Social-Media Platform - WSJ 

this summer, Alphabet said that it was not going to allow Truth Social on its Google Play platform due to its corporate policies about physical threats and incitements. But earlier this month it reversed that ruling, a decision that led to a spike in the value of Digital world's stock. 

From a broader perspective the stock price (NASDAQ: DWAC) reveals continued skepticism about whether this deal will close. DWAC was worth in the neighborhoods of $44 - $45 a share in the late spring of this year, amid optimism not only that the deal would go forward but that the property was going to be a valuable one. Over the summer that price fell, and by the fall equinox it was $17 - $18 dollars.

The Google spike I mentioned brought it up only as far as $18.30. It has since given that back, and as I write these words it is below $17. 

Part of the problem is that in order to believe that Truth Social is a valuable property one must believe that Trump's heart is in it and is going to stay in it. If, say, Elon Musk takes over twitter and asks him back, will Trump say "no, thanks, Elon, I'm committed to Truth Social now?" Will he devote equal attention both to tweeting and to truthing (or whatever it's called)? I'll leave that open. 

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