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AP Photo/Andrew Harnik, File
Donald Trump’s presidential campaign is mulling a return to Twitter and Facebook for the former tweeter-in-chief. Such a move might help his stalled political operation, but it could also seriously undermine his most prominent current business endeavor, the social media platform Truth Social. Shares in Digital World Acquisition Corp.—a company that’s supposed to one day merge with Truth Social’s parent company and take it public—dropped precipitously on the news that Trump was eyeing a return to other platforms.
On Tuesday, Trump’s campaign sent a formal letter to Meta, the parent company of Facebook, asking for Trump’s Facebook account to be restored. Trump’s Twitter account was also recently restored following Elon Musk’s takeover of that company, but Trump has not yet posted there. On Tuesday, NBC reported that Trump aides have begun workshopping potential tweets for a return. Both platforms banned Trump after the January 6 attack on the US Capitol, but the Facebook ban was eligible to be lifted after two years—a period that elapsed on January 7 of this year. Both platforms were powerful tools for his earlier campaigns; he had more than 35 million followers on Facebook and 88.7 million on Twitter. On Truth Social, which was set up in late 2021, he has just 4.2 million followers. His posts there have limited visibility beyond his most hard-core supporters.
While Truth Social has appeared to struggle—reports this past summer alleged it was failing to pay vendors on time, and several top executives and board members have left—it remains one of the few potentially bright spots in Trump’s business empire. His development projects and condo sales have dried up, and hotel revenue dropped off a cliff during the pandemic. Truth Social, meanwhile, could pay off big for Trump if it ever completes its merger with DWAC. DWAC is what is known as a special purpose acquisition corporation—a company formed with no specific business plan and which goes public as essentially a blank slate. Once public, a SPAC then seeks to merge with a business that does have a real purpose—in this case Truth Social’s parent company, Trump Media and Technology Group.
It’s a process that allows companies like TMTG, which would’ve struggled to make it through the traditional IPO process, to go public. Shares in DWAC, which signed an agreement to merge with TMTG in 2021, surged as high as $97 after the deal was announced. The price has dropped over the past year as the company has disclosed various investigations by the Securities and Exchange Commission and other financial regulators. At the heart of those probes is an allegation that the company broke the primary rule of SPACs and had already struck some kind of agreement with Trump’s company before going public. DWAC denies this. The two entities can’t merge until the SEC completes its investigation—a delay that is preventing Trump’s company from accessing huge amounts of investor money.
While following a general downward trend lately, DWAC’s share prices have bounced around based mostly on what Trump has been doing and how active he has been on Truth Social. While Trump-aligned politicians have flocked to the site, the platform has largely failed to attract many outside the MAGA-faithful. The share price jumped up around the time Trump announced his 2024 presidential campaign but then slid back down as the campaign seemed to go dormant. Shares in DWAC had slumped to less than $15 late last year—close to its all-time low—before briefly jumping earlier this week when Trump posted a message on Truth Social claiming the platform was seeing a lot of activity. But on Wednesday, after news broke that Trump’s campaign is actively pursuing a return to Twitter and Facebook, DWAC’s share prices began diving again, losing more than 7 percent of its value.
As has been the case for most of his time since founding Truth Social, Trump didn’t seem particularly concerned about soothing investors or pushing back on worries that he might neglect his pet media project. His Truth Social posts on Wednesday were extended diatribes about the investigation into the discovery of classified documents at Mar-a-Lago and a flurry of links to stories about Hunter Biden. (In one post, Trump claimed he took folders marked as “classified” as souvenirs and suggested someone might have planted real classified information among them.)
Investors should probably worry about Trump departing Truth Social—or at least relegating it to the back burner. While he has stated he will stick with the platform, it has long been made clear that he has essentially no legal obligation to do so. As I wrote last fall, Trump is supposed to post content on Truth Social six hours before it appears elsewhere, but there’s an exception for anything considered “political messaging”:
DWAC disclosed in Monday’s filing TruthSocial does have exclusive rights to some of Trump’s social media postings—but it won’t have a monopoly on the type of political red meat that made Trump such a draw on Twitter in the first place. In general, Trump will be obligated to post content on TruthSocial six hours before it can be published anywhere else. But there’s a massive loophole: These rules don’t apply to any content that is related to political messaging, political fundraising, or get-out-the-vote efforts. Those can be posted anywhere Trump wants, whenever he wants.
As I noted, only a few of Trump’s most popular tweets were strictly personal and non-political.
At the time, DWAC seemed to acknowledge that such a scenario could pose a substantial risk to its business. “TMTG’s future success will depend, to a significant extent, upon the continued presence and popularity of President Trump,” the company warned investors. “If President Trump were to discontinue his relationship with TMTG due to death, disability, or any other reason, or limit his involvement with TMTG due to becoming a candidate for political office, TMTG would be significantly disadvantaged.”
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Donald Trump is set to secure on Tuesday a stock bonus worth US$1.3-billion from the company that operates his social media app Truth Social (DJT-Q), equivalent to about half the majority stake he already owns in it, thanks to the wild rally in its shares.
The award will take the former U.S. president’s overall stake in the company, Trump Media & Technology Group (TMTG), to US$4.1-billion.
While Mr. Trump has agreed not to sell any of his TMTG shares before September, the windfall represents a significant boost to his wealth, which Forbes pegs at US$4.7-billion.
Unlike much of his real estate empire, shares are easy to divest in the stock market and could come in handy as Mr. Trump’s legal fees and fines pile up, including a US$454.2-million judgment in his New York civil fraud case he is appealing.
The bonus also reflects the exuberant trading in TMTG’s shares, which have been on a roller coaster ride since the company listed on Nasdaq last month through a merger with a special purpose acquisition company (SPAC) and was snapped up by Trump supporters and speculators.
Mr. Trump will be entitled to the stock bonus under the terms of the SPAC deal once TMTG’s shares stay above US$17.50 for 20 trading days after the company’s March 26 listing. They ended trading on Monday at US$35.50, and they would have to lose more than half their value on Tuesday for Mr. Trump to miss out.
TMTG’s current valuation of approximately US$5-billion is equivalent to about 1,220 times the loss-making company’s revenue in 2023 of US$4.1-million.
No other U.S. company of similar market capitalization has such a high valuation multiple, LSEG data shows. This is despite TMTG warning investors in regulatory filings that its operational losses raise “substantial doubt” about its ability to remain in business.
A TMTG spokesperson declined to comment on the stock award to Mr. Trump. “With more than $200 million in the bank and zero debt, Trump Media is fulfilling all its obligations related to the merger and rapidly moving forward with its business plan,” the spokesperson said.
While Mr. Trump’s windfall is rich for a small, loss-making company like TMTG, the earnout structure that allows it is common. According to a report from law firm Freshfields Bruckhaus Deringer, stock earnouts for management were seen in more than half the SPAC mergers completed in 2022.
However, few executives clinch these earnout bonuses because many SPAC deals end up performing poorly in the stock market, said Freshfields securities lawyer Michael Levitt. TMTG’s case is rare because its shares are trading decoupled from its business prospects.
“Many earnouts in SPACs are never satisfied because many SPAC prices fall significantly after the merger is completed,” Mr. Levitt said.
To be sure, TMTG made it easier for Mr. Trump to meet the earnout threshold. When TMTG agreed to merge with the SPAC in October, 2021, the deal envisioned that TMTG shares had to trade above US$30 for Mr. Trump to get the full earnout bonus. The two sides amended the deal in August, 2023 to lower that threshold to US$17.50, regulatory filings show.
Had that not happened, Mr. Trump would not have yet earned the full bonus because TMTG’s shares traded below US$30 last week. The terms of the deal, however, give Mr. Trump three years from the listing to win the full earnout, so he could have still earned it if the shares traded above the threshold for 20 days in any 30-day period during this time.
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The B.C. government is putting its proposed online harms legislation on hold after reaching an agreement with some of the largest social media platforms to make people safer online.
Premier David Eby says in a joint statement with representatives of the firms Meta, TikTok, X and Snap that they will form an online safety action table, where they’ll discuss “tangible steps” towards protecting people from online harms.
Eby says the social media companies have “agreed to work collaboratively” with the province on preventing harm, while Meta will also commit to working with B.C’s emergency management officials to help amplify official information during natural disasters and other events.
“We have had assurance from Facebook on a couple of things. First, that they will work with us to deliver emergency information to British Columbia in this wildfire season that (people) can rely on, they can find easily, and that will link into official government channels to distribute information quickly and effectively,” Eby said at a Tuesday press conference.
“This is a major step and I’m very appreciative that we are in this place now.”
The announcement to put the bill on hold is a sharp turn for the government, after Eby announced in March that social media companies were among the “wrongdoers” that would pay for health-related costs linked to their platforms.
At the time, Eby compared social media harms to those caused by tobacco and opioids, saying the legislation was similar to previous laws that allowed the province to sue companies selling those products.
Last August, Eby criticized Meta over its continued blackout of Canadian news outlets as wildfires forced thousands from their homes. Eby said it was “unacceptable” for the tech giant to cut off access to news on its platforms at a time when people needed timely, potentially life-saving information.
“I think it’s fair to say that I was very skeptical, following the initial contact (with Meta),” Eby said Tuesday.
Eby said one of the key drivers for legislation targetting online harm was the death of Carson Cleland, the 12-year-old Prince George, B.C., boy who died by suicide last October after falling victim to online sextortion.
The premier says in announcing the pause that bringing social media companies to the table for discussion achieves the same purpose of protecting youth from online harm.
“Our commitment to every parent is that we will do everything we can to keep their families safe online and in our communities,” the premier said in his statement.
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VICTORIA — Premier David Eby has pushed the pause button on a contentious bill that would have allowed the province to recover health care and other costs attributed to the marketing of risky products in B.C.
Two dozen business and industry groups had called for the New Democrats to put the bill on hold, claiming it was so broadly drafted that it could be used to go after producers, distributors and retailers of every kind.
“It is safe to say that we got the attention of these major multinational companies,” the premier told reporters on Tuesday, citing the deal with Meta, Snapchat, TikTok and X, the major players in the field.
“They understand our concern and the urgency with which we’re approaching this issue. They also understand the bill is still there.”
The New Democrats maintain that the legislation was never intended to capture the many B.C. companies and associations that complained about it.
Rather it was targeted at Facebook owner Meta and other social media companies and the online harm done to young people. A prime example was the suicide of a Prince George youth who was trapped by an online predator.
Still, there was nothing in the wording of Bill 12, the Public Health Accountability and Cost Recovery Act, to indicate its application would be confined to social media companies or their impact on young people.
Some critics wondered if the bill’s broad-based concept of harms and risks could be used to prosecute the liquor board or the dispensers of safer-supply drugs, products with proven harms greater than any sugary drink.
Perhaps thinking along those lines, the government specifically exempted itself from prosecution under the Act.
This week’s announcement came as a surprise. As recently as Monday, Attorney General Niki Sharma told reporters the government had no intention of putting the bill on hold.
Tuesday, she justified her evasion by saying the talks with the social media companies were intense and confidential.
She said the pause was conditional on Meta and the other companies delivering a quick response to government concerns.
“British Columbians expect us to take action on online safety,” she told reporters. “What I’ll be looking for at this table is quick and immediate action to get to that better, safety online.”
A prime goal is addressing online harassment and “the online mental health and anxiety that’s rising in young people,” she said
“I want to sit down with these companies look at them face to face and see what they can do immediately to improve the outcomes for British Columbians.”
Meta has already committed to rectifying Eby’s concern that it should relay urgent news about wildfires, flood and other disasters in B.C. Last year, those were blocked, collateral damage in the company’s hardball dispute with the federal government over linking to news stories from Canadian media companies.
Eby says he was very skeptical about the initial contact from the companies. Now he sees Meta’s willingness to deliver emergency information as a “major step” and he’s prepared to give talks the benefit of the doubt.
Not long ago he was scoring political points off the social media companies in the harshest terms.
“The billionaires who run them resist accountability, resist any suggestion that they have responsibility for the harms that they are causing,” said the premier on March 14, the day Bill 12 was introduced.
Given those characterizations, perhaps the big, faceless billionaires will simply direct their negotiating team to play for time until the legislation adjourns as scheduled on May 16.
“The legislation is not being pulled and we’re not backtracking,” said Sharma. “We can always come back and bring legislation back.”
The government could schedule a quick makeup session of the legislature in late May or June or even in early September, before the house is dissolved for the four-week campaign leading up to the scheduled election day, Oct. 19.
More likely, if the New Democrats feel doublecrossed, they could go back to war with the faceless billionaires with a view to re-enacting Bill 12 after a hoped-for election victory.
Even if the New Democrats get some satisfaction from the social media companies in the short term, they have also framed Bill 12 as a way to force the marketers of risky products to help cover the cost of health care and other services.
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