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Trump's social media venture says it has raised $1 billion

Stock MarketsDec 04, 2021 04:25PM ET
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© Reuters. FILE PHOTO: Former U.S. President Donald Trump looks on during his first post-presidency campaign rally at the Lorain County Fairgrounds in Wellington, Ohio, U.S., June 26, 2021. REUTERS/Shannon Stapleton

By Krystal Hu and Juby Babu

(Reuters) - Donald Trump's new social media venture said on Saturday it had entered into agreements to raise about $1 billion from a group of unidentified investors as it prepares to float in the U.S. stock market.

The capital raise, details of which were first reported by Reuters on Wednesday, underscored the former U.S. president's ability to attract strong financial backing thanks to his personal and political brand. He is working to launch a social media app called TRUTH Social that is at least several weeks away.

Digital World Acquisition Corp, the blank-check acquisition firm that will take Trump Media & Technology Group Corp public by listing it in New York, said it will provide up to $293 million to the partnership with Trump's media venture, taking the total proceeds to about $1.25 billion.

The $1 billion will be raised through a private investment in public equity (PIPE) transaction from "a diverse group of institutional investors," Trump Media and Digital World said in a statement. They did not respond to requests to name the investors.

Trump Media inked its deal with Digital World to go public in October at a valuation of $875 million, including debt. The social media venture is now valued at almost $4 billion based on the price of Digital World shares at the end of trading on Friday. Trump supporters and day traders snapped up the stock.

Many Wall Street firms such as mutual funds and private equity firms snubbed the opportunity to invest in the PIPE. Among those investors who participated were hedge funds, family offices and high net-worth individuals, Reuters reported on Wednesday. Family offices manage the wealth of the very rich and their kin.

Some Wall Street investors are reluctant to associate with Trump. He was banned from top social media platforms after the Jan. 6 attack by his supporters on the U.S. Capitol amid concerns he would inspire further violence. The Capitol attack was based on unsubstantiated claims of widespread fraud in last year's presidential election.

"As our balance sheet expands, Trump Media & Technology Group will be in a stronger position to fight back against the tyranny of Big Tech," Trump said in a statement on Saturday.

The deal also faces regulatory risk. U.S. Senator Elizabeth Warren asked Securities and Exchange Commission Chairman Gary Gensler last month to investigsate the planned merger for potential violations of securities laws around disclosure. The SEC has declined to comment on whether it plans any action.

Trump Media and Digital World said the per-share conversion price of the convertible preferred stock PIPE transaction represents a 20% discount to Digital World's volume-weighted average closing price for the five trading days to Dec. 1, when Reuters broke news of the capital raise.

If that price averages below $56 in the 10 days after the merger with Digital World has been completed, the discount will grow to 40% with a floor of $10, the companies added. Digital World shares ended trading on Friday $44.97.

Trump had 89 million followers on Twitter (NYSE:TWTR), 33 million on Facebook (NASDAQ:FB) and 24.5 million on Instagram at the time he was blocked, according to a presentation on his company's website.

Investors attending the confidential investor road shows were shown a demo from the planned social media app, which looked like a Twitter feed, Reuters reported.

FIRST-QUARTER ROLLOUT

Since Trump was voted out of office last year, he has repeatedly dropped hints that he might seek the presidency in 2024.

Special purpose acquisition companies such as Digital World had lost much of their luster with retail investors before the Trump media deal came along. Many of these investors were left with big losses after the companies that merged with SPACs failed to deliver on their ambitious financial projections.

TRUTH Social is scheduled for a full rollout in the first quarter of 2022. It is the first of three stages in the Trump Media plan, followed by a subscription video-on-demand service called TMTG+ that will feature entertainment, news and podcasts, according to the news release.

In a slide deck on its website, the company envisions eventually competing against Amazon.com (NASDAQ:AMZN)'s AWS cloud service and Google (NASDAQ:GOOGL) Cloud.

Trump's social media venture says it has raised $1 billion
 

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Comments (14)
Patron Silver
Patron Silver Dec 05, 2021 4:22PM ET
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I can help waste a billion too
Alan Rice
Alan Rice Dec 05, 2021 3:21PM ET
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Money: Well Invested. Re- Elect President Trump in 24 !!
John Laurens
John Laurens Dec 04, 2021 8:17PM ET
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I am very much looking forward to enjoying Truth Social. I will also likely invest in it when it goes public. Free Americans also need infrastructure to insure righteous forums are never deplatformed again. Do what is necessary to insure that fecesbook, twit, goog, macrosoft and the like NEVER get one cent of your money. If you ever click on ads there, you’re part of the problem.
HD HD
HD HD Dec 04, 2021 6:18PM ET
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trumps puppets want to join orange man at the tanning salon.
Trevor Roberts
LimitUp Dec 04, 2021 6:18PM ET
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So funny, typical snotty nosed liberal probably broke but acting like the know it all elite. “ I am so educated that i cant wipe my behind, my Uncle Sam does it for me”
John Laurens
John Laurens Dec 04, 2021 6:18PM ET
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Trevor Roberts  so true !
Ethan Strong
Ethan Strong Dec 04, 2021 5:15PM ET
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Another echo chamber fake news media site 🤮
Tony Huynh
Tony Huynh Dec 04, 2021 5:15PM ET
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Careful you will hurt their feeling. It's only real news if it confirm their confirmation bias.
Trevor Roberts
LimitUp Dec 04, 2021 5:15PM ET
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Are dems this out of touch or are they willingly oblivious to the dishonest media in America today. Most conservatives recognize Fox is mostly biased. Personally i dont like Fox because most of their daytime shows are just deep state reporting no different than the rest of the media and dems
John Laurens
John Laurens Dec 04, 2021 5:15PM ET
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Trevor Roberts  I noticed that 14 of the top 15 cable news shows are on Fox. Reruns of Star Trek are beating cnn. Doesn’t that tell you something about which networks are more trusted?
Ethan Strong
Ethan Strong Dec 04, 2021 5:15PM ET
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Fox news is more watched because it is readily available in most rural areas. Either way still an echo chamber and full of fake, jaded, and propaganda misinformation programing. CNN is the same bs too.
New Jazenevd
New Jazenevd Dec 04, 2021 5:08PM ET
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Comparing to the fascist creep now in WH, Trump is an angel.
Glenn Ebersole
Glenn Ebersole Dec 04, 2021 5:08PM ET
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Then why are Trumpsters shooting Antifas?
Don Getty
Don Getty Dec 04, 2021 5:08PM ET
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lol yup thats what putin wants you to believe
Cathy Bartlett
Cathy Bartlett Dec 04, 2021 4:59PM ET
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The sewer and communists will have true competition and truth from the fake communist media. Go Trump!!
Benjamin McIntire
Benjamin McIntire Dec 04, 2021 4:17PM ET
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This is the company that should be called snowflake. Just watch conservatives melt down so hard they had to make their own safe space.
Loudermilktits Loudermilktits
Loudermilktits Dec 04, 2021 4:17PM ET
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They need a place to spread their lies to their own recruits. Where else can they post links to conspiracy sites and small corner of the internet satire "news" sites like OAN.
John Laurens
John Laurens Dec 04, 2021 4:17PM ET
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There you go again.. projecting all your liberal dem attributes onto real Americans. Everybody knows liberals are the snowflakes in need of safe spaces where they don’t have to defend their failed ideology against opposing viewpoints.
Damian Wahner
Damian Wahner Dec 04, 2021 2:43PM ET
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This stock backs up to 30 I will pull the trigger.
Alan Rice
Alan Rice Dec 04, 2021 2:32PM ET
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Re-Elect President Donald Trump in 2024 !!
Benjamin McIntire
Benjamin McIntire Dec 04, 2021 2:32PM ET
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Nah bro the Kracken will do it long before then!!! Feb 8 is the new restoration date now!!! Lmfao
Tony Huynh
Tony Huynh Dec 04, 2021 2:04PM ET
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Keep raising money, with no news when his app will be launch, like you need billions to make a Twitter clone lol.
Loudermilktits Loudermilktits
Loudermilktits Dec 04, 2021 2:04PM ET
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Trump voters meet one or all of the following criteria: inbred trash, backwoods redneck, low intelligence, angry white male, low income, self hating, blind, science denier, religious fanatic, white collar criminal, or always votes republican
Loudermilktits Loudermilktits
Loudermilktits Dec 04, 2021 1:31PM ET
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Lol Trump milking his constituents for my powder... MAGA? LMFAO
Jaay Mun
Jaay Mun Dec 04, 2021 1:31PM ET
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Trump 2024 LFG?
Don Getty
Don Getty Dec 04, 2021 1:30PM ET
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cause this is a guy you should trust with your money - 6 bankruptcies and counting!
John Kelley
John Kelley Dec 04, 2021 1:30PM ET
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he is a successful businessman /s
Don Getty
Don Getty Dec 04, 2021 1:30PM ET
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John Kelley  so was bernie madoff - well until he got caught
Benjamin McIntire
Benjamin McIntire Dec 04, 2021 1:30PM ET
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Don Getty /s means sarcasm :)
 
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