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Buyer Be Careful In The SPAC/Trump Media Deal – Forbes

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Like many special purpose acquisition company (SPAC) deals, the proposed merger of Digital World Acquisition Corp. (DWAC) and the Trump Media and Technology Group is complex, which poses a risk to investors who do not understand SPACs. But this complexity is compounded by the fact that DWAC shares are trading as a meme stock with their own reddit forum, r/DWAC. It is possible, however, to dig into the details of the deal and make some conjectures about the future of the DWAC/Trump Media merger and what that might mean for its stock price movements.

The Deal

In September 2021, DWAC conducted its IPO by selling 30 million units (shares plus warrants) to 11 institutional investors, as well as the founder, at $10 per unit, raising around $300 million. The SPAC is currently trading over $70 per share, so the SPAC is worth more than $2 billion today. For the original IPO investors, the SPAC has been a great deal thus far, earning them at least a 500% return. However, whether it will be a great deal for the investors who bought in after the IPO is questionable. 

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In October 2021, DWAC announced its merger deal with Trump Media, valuing Trump Media at a minimum of $875 million for a company that is still not operational. Depending on the merged entity’s stock price during the three-year period following the merger close, Trump Media shareholders will receive up to 127.5 million shares in the merged entity plus $1.2 billion in working capital. At the current share price, the market is valuing the merged entity at over $10 billion. 

In December 2021, DWAC raised an additional $1 billion via a private offering known as a private investment in public entity (PIPE). These PIPE investors have forward agreements to invest $1 billion in convertible preferred shares in the listed Trump Media as part of the merger closing. The number of common shares they can convert to is based on the value-weighted average price (VWAP) over the 10 days after the closing, known as the VWAP period. The lower the VWAP, the more shares allocated.

In its SEC filing for the PIPE offering, DWAC disclosed that it was under investigation by the U.S. Securities and Exchange Commission (SEC). It is illegal for a SPAC to have substantive merger discussions with possible targets prior to their listing and then it is fraud to state otherwise. It has been reported that DWAC and Trump Media discussed the deal prior to their IPO and allegedly lied about it in multiple SEC filings. The SEC investigation into this deal reportedly continues, the latest in a series of reported probes into the Shanghai-based Arc Capital, which was the sole advisor in the creation of DWAC.

Possible DWAC/Trump Media Price Movements

To form conjectures about future price movements, we need to distinguish among three groups of investors: the current investors, the PIPE investors, and the shareholders of Trump Media. The current investors with long positions would like the price to increase as much as possible. Speculators who have short positions, of course, want the price to fall. PIPE shareholders want it to fall during the VWAP period so they will be allocated more shares, and Trump Media shareholders want the price to rise after the merger so they can also be allocated more shares. 

Starting with the motivations of the PIPE investors, it is clear that they want the price during this VWAP period to decline to at least to $16.67 to get their maximum share allocation of 100 million shares. The PIPE investors can potentially dump 30 million or more shares on the market during the VWAP period to achieve their goal. Furthermore, the PIPE investors can also short at any price above $33.60 during the VWAP period. Therefore, it seems logical to expect the price to be pushed down during the VWAP period, as close as possible to $16.67.

Clearly, current buyers, including the meme players, expect the merger will get SEC approval and that the listed Trump Media will do well; they also may not understand the motivations of the PIPE investors. Meanwhile, for the current sellers there are two expectations: no SEC approval and an understanding of the PIPE investors. Thus, the current buyers and sellers are playing against each other, generating the current stock price. 

To illustrate, let’s assume that there is a 50% chance for SEC approval and a share price of $70.00. Some of those who are short selling expect SEC rejection, and therefore have a price expectation of $10.20, the approximate price at which DWAC shares can be redeemed. Those who expect the deal to go through have an implied price target of around $130 because 50% (130.00) plus 50% ($10.20) gives us the share price of $70.00. 

There are two factors that are affecting this expected price. First, the meme buyers are irrationally acting as if the probability of SEC rejection is small if not zero, which seems implausible given the evidence. Second, given the limited number of shares to short, there is excess demand from short sellers. According to Bloomberg, DWAC had the highest short borrowing costs of any stock in the fourth quarter, at 86%. These costs put a cap on how much the short sellers can push the price down. All these factors are causing DWAC’s current elevated share price, now above $70. 

Of course, the price of DWAC will jump if the SEC approves the deal, which would be a good time to sell or short and not the greatest time to buy given the expected actions of the PIPE investors. Informed traders know the motivations of the PIPE investors; therefore, given SEC approval, as the merger closure approaches, we can expect some of these traders to sell their shares if they have not already, and others will short sell, pushing DWAC’s price down. If desired, they could buy back during the VWAP period. In addition, immediately after the merger, during the VWAP period, we can expect an increase in share sales and short selling by the PIPE investors. 

Post-VWAP period we can expect the shorts to be covered and the stock price to be driven by meme investors, putting upward pressure on the price. However, post-merger, the number of shares available to trade will likely rise from my estimated 15 million shares today to include an additional 45 million shares from the PIPE investors and current institutional investors. Moreover, Trump Media shareholders and the founder will also be able to start selling their shares immediately after the closing if the merged entity’s stock price is above $12 for a sustained period, which would add a minimum of another 95 million shares to the market. What remains to be seen is whether there will be enough post-merger demand to soak up all these potential shares.

Which Way from Here

Investors must take into account two critical issues: the possibility that the SEC rejects the deal and the motivation of the PIPE investors, both of which would  likely put downward pressure on DWAC’s share price. Currently, short sellers are assuming that one or the other of these outcomes will cause the price to fall. The meme players appear to ignore these two possibilities, and hence their continued upward hopes for the stock price. Post-VWAP period, Trump shareholders and buyers of the stock will want to price to climb; but there could be almost ten times the number of shares trading at that time.

Unless investors currently own or are shorting DWAC stock, now is a risky time to buy and an expensive time to short. For those who currently own the stock, it may be wise to sell before the merger, and shares could be bought again post-VWAP period. If you are currently short, hold on to your short as long as possible given the cost of shorting. Whatever the strategy, it’s wise with any SPAC merger deal—and especially this one—for investors to know what they’re doing and why.

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Social Media Tips for Event Profs – BizBash

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Social media changes rapidly—and what worked last year might not work in 2024. (Just look at X’s, or Twitter’s, dramatic revenue loss after many major platforms have stopped posting or advertising on the platform.) So what does work on social media right now, particularly for event professionals?

“We don’t just want our audience to understand what we do—we want them to know who we are,” says Zoe Haynes, the sales and marketing coordinator for PlatinumXP who oversees the event planning agency’s digital marketing. “Social media has evolved into a space for cultivating relationships and building trust. We utilize various platforms to tell stories—the story of an event transformation, behind the scenes with our production crew, or maybe even some fun office shenanigans with our CEO.”

Haynes’ focus on maintaining a consistent, authentic brand presence was a common theme among event professionals we spoke to about how they’re using social media right now. It’s all about “fostering an ongoing connection with our followers,” agrees Elias Contessotto, social media manager for event production company 15|40.

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But remember: Not every platform is created equal. Contessotto stresses the importance of tailoring your approach with each platform—but also not being afraid to experiment a bit to ensure you’re staying ahead of trends and maximizing audience engagement. “By creatively testing new tactics, we gauge audience response and efficacy, gradually integrating successful approaches into our channels,” he explains. “This iterative process empowers us to refine our content strategy continuously, adapting to evolving trends and audience preferences.”

In short, “It’s all about meeting your audience where they’re at,” says Taylor Elliot, vice president of marketing and brand strategy for Shepard Exposition Services. “Social media is such a great tool to amplify your brand voice. I always say as marketers we need to create a system that works for our brand even when we are sleeping, and social media is one of the tools to help achieve this.”

LINKEDIN & INSTAGRAM

From our conversations, LinkedIn and Instagram quickly emerged as the two top platforms in the event industry. “Instagram is our go-to for showcasing stunning event photos—however, LinkedIn holds equal if not greater importance in our strategy,” explains Haynes. “While Instagram captures attention with its visual allure, LinkedIn allows us to dive deeper into industry conversations and build relationships with our peers.”

Contessotto likes to target a B2B audience with 15|40’s LinkedIn presence, posting content that focuses on industry insights, professional networking, and collaborations with studios. “We often share static posts similar to those on Instagram, tagging relevant studios to expand our reach,” he says, noting that LinkedIn posts are often reshared by team leaders and executives. “LinkedIn [also] serves as a prime platform for spotlighting press coverage, award nominations, and industry highlights.”

On Instagram, meanwhile, Contessotto expands 15|40’s content to cater to both B2B and B2C audiences. “We share visually engaging posts that highlight our expertise, industry leadership, and collaborations, appealing to a wider range of followers,” he says. “Instagram will have ‘POV’ content, which is much more personal and requires less high-quality tools to tell our story. I came to 15|40 from an influencer background, and from experience, I notice that more amateur content does better on that platform, like using an iPhone for reels rather than a DSLR camera.”

Heather Rouffe, director of sales at Atlas Event Rental, also appreciates the more personal touch that can come with Instagram. “Through that platform, we strive to educate the industry, create brand awareness, and most importantly to us, show the personal side to our company, brand, and rentals,” she explains. “With so much of the human side of things lost in a digital age, being personable and showing the people behind the brand is very important to us. We find the clients really appreciate the behind-the-scenes content and becoming familiar with the Atlas crew.”

On the flip side, though, that doesn’t mean LinkedIn can’t get a little personal. Al Mercuro, senior account director at trade show display company Genesis Exhibits, prioritizes LinkedIn due to the connections he’s been able to make with marketing directors and event directors at companies he’d like to do business with.

“I try to not promote my company as much as my brand by sharing information that will help them in their jobs—I find I get many referrals this way,” Mercuro notes. “I believe it is also a living resume; before I meet with someone, they will often check out my LinkedIn page to learn more about me. The more you can build up your profile and the number of connections you have adds to your value and makes it attractive to have them want to work with you.”

Jonathan Kazarian, the founder and CEO of Accelevents, also uses LinkedIn to build up his personal thought leadership—and therefore, build awareness of his event management software company. “Ninety-nine percent of what I share on LinkedIn is professional,” he says. “I’ll share something about my personal life to build connection, but that’s not my focus with LinkedIn.” 

FACEBOOK, TWITTER (X), TIKTOK, & MORE

In a sign of changing times, most of the event professionals we spoke with are not investing much in Facebook or Twitter (now known as X)—though many are still updating them. 

“We push out all of our Instagram content to our Facebook, to ensure our followers and intended audiences on both platforms are receiving similar content,” says Contessotto. “We also maintain our Twitter, or X, channel to share some of our event photos, as well as retweet content that clients we work with post that are captured at our events.”

Mercuro finds that Facebook is still an effective way to reach older generations—but for younger generations, he’s found some success marketing events on TikTok. “I am a board member of a nonprofit concert venue, and we needed to attract a younger audience,” he remembers. “I suggested we work with a local university and their marketing classes to take on a project like our organization to give them real-life experience. They chose to use TikTok to reach the younger demographics in our area, and it has been extremely successful.”

Contessotto agrees that TikTok is naturally very Gen Z-oriented, so content should be tailored accordingly. “We’ve noticed that we typically receive high engagement when our content is celebrity-focused,” he says. “Our team is constantly working to balance out our TikTok pages to include viral content, as well as videos that highlight our diverse portfolio of work to attract the right kind of audience.”

Haynes says she’s still exploring TikTok’s potential for Platinum XP. “I’ve noticed its popularity as a discovery platform,” she says. “It’s a great tool for driving awareness, but we should also consider whether our target audience is active on TikTok.” One tool that Haynes does invest time in? Pinterest. “It’s a powerful tool for SEO purposes. Its visual nature allows us to drive awareness to our website through captivating photos. By sparking curiosity, we encourage users to click through and explore further.”

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North Korea conducts test on new ‘super-large warhead’: State media – Al Jazeera English

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Pyongyang says new warhead designed for cruise missiles, adding that a new anti-aircraft rocket was also tested.

North Korea has conducted a test on a “super-large warhead” designed for a strategic cruise missile, state media reports, adding that it also launched a new type of anti-aircraft missile.

“The DPRK Missile Administration has conducted a power test of a super-large warhead designed for ‘Hwasal-1 Ra-3’ strategic cruise missile”, KCNA news agency reported on Saturday, referring to North Korea by an abbreviation for its official name – Democratic People’s Republic of Korea.

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North Korea also carried out a test launch on Friday afternoon of a “Pyoljji-1-2”, which state media said was a “new-type anti-aircraft missile”.

KCNA added that “a certain goal was attained” through the test without providing further details.

The weapons tests were part of the “regular activities of the administration and its affiliated defence science institutes”, KCNA reported, referencing the operation of “new-type weapon systems”.

The tests “had nothing to do with the surrounding situation”, KCNA added, but did not give any further information.

In early April, North Korea said it had tested a new medium-to-long-range solid-fuel hypersonic missile, with state media sharing a video of it being launched as leader Kim Jong Un looked on.

Cruise missiles are among a growing collection of North Korean weapons designed to overwhelm regional missile defences. They supplement the North’s vast arsenal of ballistic missiles, including intercontinental variants, which are said to be aimed at the continental United States.

Analysts say anti-aircraft missile technology is an area where North Korea could benefit from its deepening military cooperation with Russia, as the two countries align in the face of their separate, intensifying confrontations with the US.

The US and South Korea have accused the North of providing artillery shells and other equipment to Russia to help extend its warfighting ability in Ukraine.

Since its second nuclear test in 2009, Pyongyang has been under heavy international sanctions, but the development of its nuclear and weapons programmes has continued unabated.

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Lawmakers pan Ben Gvir for ‘unforgivable’ tweet on alleged Israeli strike on Iran – The Times of Israel

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Italian FM says Israel gave US ‘last minute’ warning about drone attack on Iran

CAPRI, Italy (AP) — The United States told the Group of Seven foreign ministers that it received “last minute” information from Israel about a drone action in Iran early this morning, Italy’s foreign minister says.

Italian Foreign Minister Antonio Tajani, who chaired the meeting of ministers of industrialized countries, says the United States provided the information at session this morning that was changed at the last minute to address the suspected attack.

Tajani says the US informed the G7 ministers that it had been “informed at the last minute” by Israel about the drones. “But there was no sharing of the attack by the US. It was a mere information.”

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Early Friday, Iran fired air defenses at a major air base and a nuclear site near the central city of Isfahan after spotting drones, part of an apparent Israeli attack in retaliation for Tehran’s unprecedented drone-and-missile assault on the country last weekend.

In a communique following the three-day meeting, the ministers urged the parties “to prevent further escalation.”

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