In a news event attempting to bring together everything bad about the world, YOLO investors are pushing a Trump-affiliated SPAC to the moon, transforming it into a GameStop-like meme stock in hopes of supporting (or profiting off of) the former president’s goal of creating the world’s first “‘Non-Cancellable’ Global Community”—aka a social media site for conservatives.
One day after announcing that it planned to merge with Trump Media & Technology Group to create the conservative site TRUTH Social, shares of the special purpose acquisition vehicle Digital World Acquisition Corp. shot up 340 percent to well over $35, triggering volatility halts after it became one of the most popular names on the stock-pumping, AMC-loving Reddit board WallStreetBets and the “most traded stock with a value above a penny,” according to Bloomberg. The stock had been trading below $10 yesterday before the Trump announcement.
SPACs are an increasingly popular means through which private companies (like WeWork) can go public quickly and with less rigor than is involved in the traditional IPO process. The mechanism is that a shell company raises money through an initial public offering with the promise it will find a promising company to acquire. (This is why they are often referred to as “blank check companies.”) The company then uses that money to buy a private firm, after which it basically hands the business and name over to the acquired company.
So while the name trading today on the Nasdaq is Digital World Acquisition Corp., it will switch over to Trump Media & Technology Group should the deal close.
Trump has been pissed off about his lack of an online microphone ever since Twitter and Facebook banned him following the January 6 riots and Trump’s continuously false claims that someone stole the 2020 presidential election from him, Reuters has reported. That makes the horribly named TRUTH Social feel like something of an inevitability, in retrospect.
The announcement valued Trump’s as-of-now theoretical company at $875 million, and the plan is to push out a beta launch in November and have the whole thing up and running by early 2022—two facts that combine to immediately place TRUTH Social among the many great media startups that have promised something they could not deliver on.
Considering the opportunity to build the first “‘Non-Cancellable’ Global Community” to be a “Massive Market Opportunity,” Trump Media & Technology Group hopes to go to battle with both the “liberal media consortium” and “Big Tech,” according to a pitch deck. While the company plans to start off by merely taking on Facebook and Twitter, it plans to eventually take on Netflix, Disney, CNN, and iHeart media by creating a video-on-demand and podcast service called TMTG+ featuring “’non-woke’ entertainment.”
It also plans to take on Amazon, Google Cloud, and Stripe, although it is not clear on exactly how. The former president will serve as chairman.
“We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American President has been silenced. This is unacceptable,” Trump said in a typically understated prepared statement. “Everyone asks me why doesn’t someone stand up to Big Tech? Well, we will be soon!”
The company’s overview deck also includes a count of Trump’s “Historic Social Media Following.” This might seem like an entirely irrelevant factoid for a broader social media platform to include, except that the sell-point— especially for now—is not the company’s business plan, but Trump himself. Think Trump casinos, but on Robinhood.
“You are not buying this stock because you have faith in its optimistic cash-flow forecasts; it has not bothered with cash-flow forecasts,” Bloomberg’s Matt Levine wrote Thursday. “You are buying this stock because you like Donald Trump and think that Tech Monopoly Censorship Threatens Free Speech. Cash flows, valuation, etc., are all irrelevant. It is just vibes.”
“Doesn’t it feel like for the last 80 or so years there has been a dominant view of investing, a first-page-of-the-textbook given, that investments are worth the present value of their expected future cash flows?” Levine added. “Doesn’t it feel like that world has ended and a new one has begun? I should go buy some Dogecoin.”
You can already pre-order TRUTH Social in the Apple App store. Welcome to hell.
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